Patents and Cumulative Innovation: Causal Evidence from the Courts*

By Alberto Galasso, Mark Schankerman. 2015

423 citations recorded by the source corpus.

Cumulative innovation is central to economic growth. Do patent rights facilitate or impede follow-on innovation? We study the causal effect of removing patent rights by court invalidation on subsequent research related to the focal patent, as measured by later citations. We exploit random allocation of judges at the U.S. Court of Appeals for the Federal Circuit to control for endogeneity of patent invalidation. Patent invalidation leads to a 50 percent increase in citations to the focal patent, on average, but the impact is heterogeneous and depends on characteristics of the bargaining environment. Patent rights block downstream innovation in computers, electronics and medical instruments, but not in drugs, chemicals or mechanical technologies. Moreover, the effect is entirely driven by invalidation of patents owned by large patentees that triggers more follow-on innovation by small firms.

Subfields: Economics and Econometrics, Management of Technology and Innovation

View Paper: https://www.semanticscholar.org/paper/00d67439cf9f0610e0c94c7e968848266a6e6312

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In Economics and Econometrics

In Management of Technology and Innovation

Citations in the corpus

Overlapping Ownership, R&D Spillovers, and Antitrust Policy (2019, positive): “…wants to establish a cap on the degree of internalization this will imply a more strict cap on shareholdings with proportional control than those with silent (cid:133)nancial interests or those which are cross-shareholdings among (cid:133)rms. (Griliches 1990, Galasso and Schankerman 2015).”
Patent rights, product market reforms, and innovation (2015, background): “Galasso and Schankerman (2015) recently reported that invalidation of a US patent has a significantly positive impact on subsequent citations received by the invalidated patent in technology fields related to industry NACE 30-33 (electrical equipment and electronics, computers and communications, an”
Frontier Knowledge and Scientific Production: Evidence from the Collapse of International Science (2018, background): “Intellectual property rights increase the cost of using prior knowledge in follow-on research (Scotchmer, 1991; Williams, 2013; Murray et al., 2009; Galasso and Schankerman, 2015; Biasi and Moser, 2015).”
Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2013, neutral): “In particular, models of endogenous technological change (see Aghion, Akcigit, and Howitt (2014) for a recent survey) mainly considered a uniform type of (applied) research and ignored basic research investment in the economy.”