Patent Tigers: the New Geography of Global Innovation

Jonathan Barnett (University of Southern California)

Abstract : It is widely argued that international extension of the patent system hinders innovation in developing countries by restricting access to technological inputs. I re-examine the connection between patents and innovation by assessing the extent to which the U.S. patent regime supports R&D by firms in emerging market countries. Based on USPTO data covering all utility patents issued to U.S. and foreign inventors during 1965-2015, and supplemented by additional data, I argue that the U.S. patent system has supported innovation in a cluster of foreign countries that have developed dramatically since the 1980s. Three smaller and late-developing countries are now (together with Japan) the most intensive foreign users of the U.S. patent system on a per-capita and per-GDP basis: Israel, South Korea and Taiwan. Based on entity type, industry type and other characteristics of the leading “first-named” assignees of USPTO patents in Israel and Taiwan during 2000-2015, and supplemented by other evidence relating to these countries’ innovation capacities and performance, I argue that these countries use USPTO patents to extract value from R&D investments by supplying product or process inputs to the global value chains that execute innovation and commercialization functions on the pathway to target consumption markets. While prior work has shown that patents sometimes promote entry into technology markets by upstream R&D firms that lack downstream production and distribution capacities, this paper extends that rationale and presents evidence that patents can promote entry into technology markets by economies that are rich in intellectual capital but have small domestic markets in which to extract returns on that capital.

Discretion in Patent Damages

John M. Golden (University of Texas School of Law)

Abstract : Delegation of decision-making discretion has long been a strategy for responding to concerns about information costs and contingency in human institutions and organizations. Such concerns tend to be particularly high in the context of intellectual property, whose focus, promoting creativity and innovation, naturally entails problems of uncertainty and incommensurability. In the United States, current disputes over patent damages provide a striking example of these issues. Courts struggle to assess how much compensation is appropriate for violating a patentee’s “right to exclude,” particularly when the patent in question covers only a facially small portion of an overall product or process. In addressing key questions relating to such assessments, including the admissibility and sufficiency of evidence as well as the extent of any enhanced damages, trial judges wield great discretion. More generally, by providing only relatively bare statutory instructions on monetary remedies, Congress has effectively given the judiciary as a whole great discretion in administering these awards. With reference to principles of legal design likely to be useful in situations characterized by uncertainty, context specificity, and information scarcity, this Article contends that, at least if the purposes of patent law’s main monetary remedies have been rightly understood, generous allotments of discretion to the judiciary as a whole and to district court judges in particular make substantial sense. On the other hand, appellate courts and, in some instances, Congress itself can do more to guide and, at least on the margins, confine these exercises of discretion, and this Article suggests ways in which such guidance and confinement might proceed.

Platforms for Technology: an Alternative to Markets for Know-how

Tracy R. Lewis (Fuqua School of Business)
Alan Schwartz (Yale Law School)

Abstract : This paper addresses recent failures in the market for know-how with regards to the development of complicated, integrated network technologies. The market failure is manifested in attempts to manipulate the market for patent rights, to extract higher royalties for the transfer of "must-have" technology. The observed manipulation is not the problem however, but a symptom of a system that is unable to provide the central planning and coordination required for technology integration. We argue that technology platforms in which the development and exchange of technology is centrally planned and governed by liability rules is a superior alternative.

Knowledge Spillovers in Emerging Wine Regions

Eric C. Mota (Baylor University)
Peter G. Klein (Baylor University)

Abstract : Nascent firms have long relied on networks, clusters, and alliances to exploit knowledge spillovers (Bruderl & Preisendorfer, 1998; McEvily & Marcus, 2005; Zheng, Singh & Mitchell, 2015). Much of the recent empirical literature on networks focuses on innovative, high-technology companies, showing how a firm’s network position affects its innovative activities (McDermott, Corredoira & Kruse, 2009). What about less innovative products and markets? We look at emergent winery clusters in non-traditional US wine-producing areas such as Michigan, Missouri, New York, and Vermont. These firms generally produce lower-quality, less expensive products that are consumed locally, rather than high-quality products for export. Consistent with previous research, we find that a firm’s ties to other actors affect its performance (Elfring & Hulsink, 2003; Li, Zubielqui & O’Connor, 2015; Rowley, Baum, Shipilov, Greve & Rao, 2004). Unlike previous work, however, we find that the main determinant of firm performance is the firm’s relationship with an industry association, which performs the critical role of network anchor.