Why do patents facilitate trade in technology? Testing the disclosure and appropriation effects

Abstract

Evidence suggests that patents facilitate technology transactions but the reasons for the effect are unclear. Patents may assist trade in technology by either: (i) protecting buyers against the expropriation of the idea (the 'appropriation effect'); or (ii) increasing information sharing during the negotiation phase through publication of technical details contained in the patent document (the 'disclosure effect'). We estimate the strength of both effects using exact matching analysis on a novel dataset of 860 technology transaction negotiations. We find evidence for the appropriation but not the disclosure effect. Technology transaction negotiations involving a granted patent instead of a pending patent (our test for the appropriation effect) are significantly more likely to be successfully completed. The appropriation effect is stronger in technology fields where patent protection is known to be more effective such as biotech, chemicals, drugs and medical.

Patenting motives, technology strategies, and open innovation

“…In addition, much research points at the important function of patents even for innovations that are shared across firms boundaries (Arora and Ceccagnoli, 2006, de Rassenfosse et al, 2016, West, 2006. In such situations there are less possibilities to rely on other protection mechanisms, such as secrecy (e.g., Arundel, 2001) or control of complementary assets (Teece, 1986).…”

“…Ever since the seminal work by Arrow (1962) the need for patents to enable technology trade has been accepted in theory. The argument is that patents enable codified disclosure of technologies (de Rassenfosse et al, 2016, Zobel et al, 2016 and facilitate technology trade or collaboration (Blind et al, 2006, Bogers, 2011, Chesbrough, 2003a. In these situations the contractual underpinnings created by patents are useful for governing collaboration and trade (Granstrand and Holgersson, 2013, Hagedoorn and Zobel, 2015, Merges, 2011.…”

“…While patenting may seem contradictory to open innovation, several scholars have pointed at the enabling role of patents for such interorganizational innovation processes (e.g., Chesbrough, 2003a, Granstrand, 2006, Merges, 2011 and for various forms of technology trade (e.g., Arora et al, 2001, Arrow, 1962, de Rassenfosse et al, 2016, Tietze, 2012. Much recent research has also pointed at the importance of integrating patent strategy with firm strategy in general and technology strategy more specifically.…”

Comparative Study on the Patent Maintenance Fees System of Countries or Areas in Asia

“…The policymakers should be aware that the system can promote technology trade and innovation to some extent, and learn to manipulate the "strength" of their invention patent regimes. [9,10] To sum up, four points can be concluded: First, due to their different specific legal, economic, historical and the other factors, the countries exists a maintenance fee charging standard which is beneficial to the development of its patent system, although the standard for the country or area isn't optimal, or it's optimal at this moment but not in the future. Second, most countries or areas set the charging standard according to the course of the profit from patent.…”

Evaluating Determinant Priority of License Fee in Biotech Industry

“…Several studies on environmental factors conducted since Sung have highlighted the importance of the business environment of the licensee's market [25,[28][29][30][32][33][34][35]37,38].…”