IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_4355.html
   My bibliography  Save this paper

Firm Reputation and Incentives to "Milk" Pending Patents

Author

Listed:
  • Johannes Koenen
  • Martin Peitz

Abstract

In this paper we develop a theory of patenting in which a firm preserves its reputation to only apply for a patent whenever a truly patentable idea has been generated. Firms have a short-run incentive to deviate and receive additional rents from unworthy pending patents, as well as potential rents from PTO mistakes in granting patents. We provide conditions for reputation to be preserved in equilibrium and analyze which market environments are favorable for such an equilibrium to exist. In particular, we analyze the merits of different patent systems.

Suggested Citation

  • Johannes Koenen & Martin Peitz, 2013. "Firm Reputation and Incentives to "Milk" Pending Patents," CESifo Working Paper Series 4355, CESifo.
    • Handle: RePEc:ces:ceswps:_4355
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp4355.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Luis M.B. Cabral, 2000. "Stretching Firm and Brand Reputation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 658-673, Winter.
    2. Johannes Koenen & Martin Peitz, 2012. "The Economics of Pending Patents," Chapters, in: Joseph E. Harrington Jr & Yannis Katsoulacos (ed.), Recent Advances in the Analysis of Competition Policy and Regulation, chapter 3, Edward Elgar Publishing.
    3. Caillaud, Bernard & Duchêne, Anne, 2011. "Patent office in innovation policy: Nobody's perfect," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 242-252, March.
    4. Popp David & Juhl Ted & Johnson Daniel K.N., 2004. "Time In Purgatory: Examining the Grant Lag for U.S. Patent Applications," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-45, November.
    5. Florian Schuett, 2013. "Patent quality and incentives at the patent office," RAND Journal of Economics, RAND Corporation, vol. 44(2), pages 313-336, June.
    6. Haeussler, Carolin & Harhoff, Dietmar & Mueller, Elisabeth, 2009. "To Be Financed or Not … - The Role of Patents for Venture Capital Financing," Discussion Papers in Business Administration 8970, University of Munich, Munich School of Management.
    7. Rudyk, Ilja, 2013. "Deferred Patent Examination," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 416, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    8. Joshua S. Gans & David H. Hsu & Scott Stern, 2008. "The Impact of Uncertain Intellectual Property Rights on the Market for Ideas: Evidence from Patent Grant Delays," Management Science, INFORMS, vol. 54(5), pages 982-997, May.
    9. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    10. Iain M. Cockburn & Megan J. MacGarvie, 2009. "Patents, Thickets and the Financing of Early‐Stage Firms: Evidence from the Software Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 729-773, September.
    11. Joseph P. Cook, 2007. "On Understanding the Increase in U.S. Patent Litigation," American Law and Economics Review, American Law and Economics Association, vol. 9(1), pages 48-71.
    12. Jay Pil Choi, 1998. "Brand Extension as Informational Leverage," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(4), pages 655-669.
    13. Birger Wernerfelt, 1988. "Umbrella Branding as a Signal of New Product Quality: An Example of Signalling by Posting a Bond," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 458-466, Autumn.
    14. Michael J. Meurer, 1989. "The Settlement of Patent Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 77-91, Spring.
    15. Nicolas van Zeebroeck, 2007. "Patents only live twice: a patent survival analysis in Europe," Working Papers CEB 07-028.RS, ULB -- Universite Libre de Bruxelles.
    16. Joseph E. Harrington Jr & Yannis Katsoulacos (ed.), 2012. "Recent Advances in the Analysis of Competition Policy and Regulation," Books, Edward Elgar Publishing, number 14933.
    17. Fishman, Arthur & Rob, Rafael, 1995. "The Durability of Information, Market Efficiency and the Size of Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 19-36, February.
    18. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
    19. Horstmann, Ignatius & MacDonald, Glenn M & Slivinski, Alan, 1985. "Patents as Information Transfer Mechanisms: To Patent or (Maybe) Not to Patent," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 837-858, October.
    20. Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring.
    21. Vidya Atal & Talia Bar, 2014. "Patent Quality and a Two-Tiered Patent System," Journal of Industrial Economics, Wiley Blackwell, vol. 62(3), pages 503-540, September.
    22. Haeussler, Caroline & Harhoff, Dietmar & Müller, Elisabeth, 2009. "To Be Financed or Not... - The Role of Patents for Venture Capital Financing," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 253, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    23. Claude Crampes & Corinne Langinier, 2002. "Litigation and Settlement in Patent Infringement Cases," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 258-274, Summer.
    24. Bar-Isaac, Heski & Tadelis, Steven, 2008. "Seller Reputation," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(4), pages 273-351, August.
    25. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
    26. James J. Anton & Dennis A. Yao, 2004. "Little Patents and Big Secrets: Managing Intellectual Property," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 1-22, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Comino, Stefano & Graziano, Clara, 2015. "How many patents does it take to signal innovation quality?," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 66-79.
    2. Johannes Koenen & Martin Peitz, 2012. "The Economics of Pending Patents," Chapters, in: Joseph E. Harrington Jr & Yannis Katsoulacos (ed.), Recent Advances in the Analysis of Competition Policy and Regulation, chapter 3, Edward Elgar Publishing.
    3. Marco, Alan C. & Sarnoff, Joshua D. & deGrazia, Charles A.W., 2019. "Patent claims and patent scope," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    4. R. John Milne & Brian T. Denton & Troy White, 2015. "ASP, The Art and Science of Practice: How Analytics Practitioners Can Learn from Published Patents and Protect Their Work," Interfaces, INFORMS, vol. 45(3), pages 271-277, June.
    5. Dietmar Harhoff, 2016. "Patent Quality and Examination in Europe," American Economic Review, American Economic Association, vol. 106(5), pages 193-197, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johannes Koenen & Martin Peitz, 2012. "The Economics of Pending Patents," Chapters, in: Joseph E. Harrington Jr & Yannis Katsoulacos (ed.), Recent Advances in the Analysis of Competition Policy and Regulation, chapter 3, Edward Elgar Publishing.
    2. Andrew Eckert & Corinne Langinier, 2014. "A Survey Of The Economics Of Patent Systems And Procedures," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 996-1015, December.
    3. Comino, Stefano & Graziano, Clara, 2015. "How many patents does it take to signal innovation quality?," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 66-79.
    4. Schankerman, Mark & Schuett, Florian, 2016. "Screening for Patent Quality," CEPR Discussion Papers 11688, C.E.P.R. Discussion Papers.
    5. Jeanine Miklós-Thal, 2012. "Linking reputations through umbrella branding," Quantitative Marketing and Economics (QME), Springer, vol. 10(3), pages 335-374, September.
    6. Schankerman, Mark & Schütt, Florian, 2016. "Screening for Patent Quality : Examination, Fees, and the Courts," Other publications TiSEM fa319822-6e68-4e05-8547-4, Tilburg University, School of Economics and Management.
    7. Miklos-Thal, Jeanine, 2008. "Linking Reputations: The Signaling and Feedback Effects of Umbrella Branding," MPRA Paper 11045, University Library of Munich, Germany.
    8. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    9. Audretsch, David B. & Bönte, Werner & Mahagaonkar, Prashanth, 2012. "Financial signaling by innovative nascent ventures: The relevance of patents and prototypes," Research Policy, Elsevier, vol. 41(8), pages 1407-1421.
    10. Kenneth Zahringer & Christos Kolympiris & Nicholas Kalaitzandonakes, 2018. "Time to patent at the USPTO: the case of emerging entrepreneurial firms," The Journal of Technology Transfer, Springer, vol. 43(4), pages 923-952, August.
    11. Haeussler, Carolin & Harhoff, Dietmar & Mueller, Elisabeth, 2009. "To Be Financed or Not … - The Role of Patents for Venture Capital Financing," Discussion Papers in Business Administration 8970, University of Munich, Munich School of Management.
    12. Jungju Yu, 2021. "A Model of Brand Architecture Choice: A House of Brands vs. A Branded House," Marketing Science, INFORMS, vol. 40(1), pages 147-167, January.
    13. Zvika Neeman & Aniko Öry & Jungju Yu, 2019. "The benefit of collective reputation," RAND Journal of Economics, RAND Corporation, vol. 50(4), pages 787-821, December.
    14. Hakenes, Hendrik & Peitz, Martin, 2008. "Umbrella branding and the provision of quality," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 546-556, March.
    15. Darcy, Jacques & Krämer-Eis, Helmut & Guellec, Dominique & Debande, Olivier, 2009. "Financing technology transfer," EIB Papers 10/2009, European Investment Bank, Economics Department.
    16. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 315-380, Elsevier.
    17. Iain M. Cockburn & Megan J. MacGarvie & Elisabeth Müller, 2010. "Patent thickets, licensing and innovative performance," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(3), pages 899-925, June.
    18. Annamaria Conti & Jerry Thursby & Marie Thursby, 2013. "Patents as Signals for Startup Financing," Journal of Industrial Economics, Wiley Blackwell, vol. 61(3), pages 592-622, September.
    19. Prithwiraj Choudhury & Martine R. Haas, 2018. "Scope versus speed: Team diversity, leader experience, and patenting outcomes for firms," Strategic Management Journal, Wiley Blackwell, vol. 39(4), pages 977-1002, April.
    20. Schmidbauer, Eric & Lubensky, Dmitry, 2018. "New and improved?," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 26-48.

    More about this item

    Keywords

    pending patents; reputation; patent quality; patent office policy;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_4355. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.