Working Paper: NBER ID: w21442
Authors: Joerg Baten; Nicola Bianchi; Petra Moser
Abstract: This paper investigates whether compulsory licensing – which allows governments to license patents without the consent of patent-owners – discourages invention. Our analysis exploits new historical data on German patents to examine the effects of compulsory licensing under the US Trading-with-the-Enemy Act on invention in Germany. We find that compulsory licensing was associated with a 28 percent increase in invention. Historical evidence indicates that, as a result of war-related demands, fields with licensing were negatively selected, so OLS estimates may underestimate the positive effects of compulsory licensing on future inventions.
Keywords: compulsory licensing; patents; invention; Germany; historical data
JEL Codes: N3; N32; N34; O3; O34; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Compulsory licensing (D45) | Local average treatment effect of additional patents (C22) |
| Compulsory licensing (D45) | Increase in invention (O39) |
| Increase in invention (O39) | Increase in patents applied for (O34) |
| Compulsory licensing (D45) | Increased investment in R&D (O39) |
| Compulsory licensing (D45) | Increase in patenting in war-related fields (H56) |
| Confiscation of German patents (H13) | Clearer causal interpretation of results (C22) |