Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222117 
Year of Publication: 
2019
Series/Report no.: 
Discussion Paper No. 220
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
We investigate the causal effect of patent rights on cumulative innovation, using large-scale data that approximate the patent universe in its technological and economic variety. We introduce a novel instrumental variable for patent invalidation that exploits personnel scarcity in post-grant opposition at the European Patent Office. We find that patent invalidation leads to a highly significant and sizeable increase of follow-on inventions. The effect is driven by cases where the removal of the individual exclusion right creates substantial freedom to operate for third parties. Importantly, our results suggest that bargaining failure between original and follow-on innovators is not limited to environments commonly associated with high transaction costs.
Subjects: 
cumulative innovation
patents
bargaining failure
freedom to operate
opposition
JEL: 
K41
L24
O31
O32
O33
O34
Document Type: 
Working Paper

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