In this paper, I examine the impact of partner technological diversity and alliance organizational form on firm innovative performance. Using a sample of 463 R&D alliances in the telecommunications equipment industry, I find that alliances contrib-ute far more to firm innovation when technological diversity is moderate, rather than low or high. Although this relationship holds irrespective of alliance organization, I find that hierarchical organization, such as an equity joint venture, improves firm benefits from alliances with high levels of technological diversity. Thus, alliance organizational form likely influences partner ability and incentives to share informa-tion, which affects performance. Innovation has become the industrial religion of the late 20th century. Business sees it as the key to increasing profits and market share.... Yet there is still much confusion over... how to make it happen.-The Economist, 1999 Increasingly, competition among firms turns on whether they can create and commercialize knowl-edge in a timely and cost-efficient manner. This observation is particularly true for technology-in-tensive industries, where the pace of technological development is increasing, product life cycles are shortening, and the expense of updating capital equipment is rising. In response to these competi-tive pressures, firms often look for alternatives to in-house R&D. Interfirm R&D collaboration repre-sents one such alternative whereby firms may gain access to complementary capabilities, reap econo-mies of scale in R&D, and shorten development time while spreading the risk and cost of such new developments (e.g., Mariti & Smiley, 1983; Powell,

Patents, patent litigation, and patent settlements increasingly influence competition. Settlements of patent disputes comes in many forms, including licensing and cross-licensing agreements, patent pools, mergers, and joint ventures. While frequently pro-competitive, such settlements can stifle competition and harm consumers. This paper proposes a specific antitrust rule limiting such settlements: a settlement must leave consumers at least as well off as they would have been from ongoing patent litigation. After establishing that profitable settlements satisfying this constraint generally exist, the paper shows how this antitrust rule can be used to evaluate three types of settlements: mergers, patent pools, and negotiated entry dates.

We develop and test a model of the patenting and R&D decisions of an innovating firm whose scientist-employees sometime quit to join or start a rival. In our model, the innovating fn'm patents to protect itself from its employees. We show theoretically that the risk of a scientist's departure reduces the fn'm's R&D expenditures and raises its propensity to patent an innovation. We find evidence from fn'm-level panel data that is consistent with this latter result. Our empirical work suggests that scientists' turnover partly explains cross-industry patenting variation, recent economy-wide increases in patenting, and why small firms have high patent- R&D ratios.

This paper considers the impact of the intellectual property (IP) system on the timing of cooperation/licensing by start-up technology entrepreneurs. If the market for technology licenses is efficient, the timing of licensing is independent of the patent grant date, and productive efficiency considerations will result in licensing as early as possible after invention. In contrast, the need for disclosure of unprotected knowledge on the part of the inventor, asymmetric information between the licensor and potential licensees, or search costs may retard efficient technology transfer. In these cases, the actual grant of a patent may facilitate trade in the market for ideas by establishing the scope of IP rights. Employing a dataset which combines information about the timing of patent grants and cooperative licensing, we find that pre-grant licensing is quite common, occurring in about 40 % of our sample; moreover, the hazard rate for achieving a cooperative licensing agreement increases significantly with the granting of formal IP rights. Finally, the importance of a patent grant for licensing depends on the strategic environment in which the firm operates. When productive efficiency effects are important (as when technology

We report the results of the first comparative study of the determinants and effects of patent oppositions in Europe and of re-examinations on corresponding patents issued in the United States. The analysis is based on a dataset consisting of matched EPO and US patents. Our analysis focuses on two broad technology categories- biotechnology and pharmaceuticals, and semiconductors and computer software. Within these fields, we collect data on all EPO patents for which oppositions were filed at the EPO. We also construct a random sample of EPO patents with no opposition in these technologies. We match these EPO patents with the “equivalent ” US patents covering the same invention in the United States. Using the matched sample of USPTO and EPO patents, we compare the determinants of opposition and of reexamination. Our results indicate that valuable patents are more likely to be challenged in both jurisdictions. But the rate of opposition at the EPO is more than thirty times higher than the rate of reexamination at the USPTO. Moreover, opposition leads to a revocation of the patent in about 41 percent of the cases, and to a restriction of the patent right in another 30 percent of the cases. Re-examination results in a cancellation of the patent right in only 12.2 percent of all cases. We also find that reexamination is frequently initiated by the patentholders themselves. Keywords: JEL Classification:

Economics, Law and Intellectual Property ’ (June 2000) and participants at a seminar at ECIS for helpful comments and discussion. This paper investigates the role of intellectual property rights (IPRs) in shaping the GSM industry. This industry is an example of a high-tech industry in which standards play a large role. In the process of designing the GSM standard, a lot of attention has been given to IPRs, mainly to avoid a situation in which a single IPR holder could hamper or even totally block the development of the standard. Nevertheless, the ultimate GSM standard contains a large amount of so-called ‘essential IPRs’, i.e., IPRs without which the implementation of GSM products is impossible. The paper starts with a general discussion of the development of GSM, and the role of firm strategy and IPRs in this process. Next, we present a database on the essential IPRs in the GSM standard. This database has been compiled on the basis of international patent statistics, and the data that manufacturers have supplied to ETSI, the European standardization body responsible for defining the GSM standard. We use this database to assess the dynamic IPR position of firms in the original GSM standard and its subsequent development.

In this paper we empirically evaluate the relationship between R&D incentives and the patent premium, defined as the additional payoffs due to patenting an innovation relative to payoff to the unpatented innovation. What is the expected average premium, if any? Does it vary across industries? What would be the impact of increasing the premium on R&D investment? To answer these questions, we develop a model linking a firm’s R&D with its decision to patent for product innovations. The model assumes that R&D investments depend upon the expected value of an innovation, which is itself a function of expected premium if the innovation is patented, assuming that the firm will choose to patent optimally i.e., only if the expected payoff from patenting an innovation is greater than the expected cost. The patent premium, is modeled as a random variable specific to an innovation, whose distribution depends on unobserved firm characteristics. We estimate the model with a unique data set drawn from the 1994 Carnegie Mellon Survey on Industrial R&D in the United States, which allows us to develop measures of R&D, patent propensity, patent effectiveness, and information flows from other firms and universities, among other variables, at the R&D lab level. We find that on average patents provide a positive expected premium in only a few industries, namely drugs, biotech and medical instruments, with machinery, computers, and

ABSTRACT. Recent initiatives by a number of OECD governments suggest considerable interest in emulating the Bayh-Dole Act of 1980, a piece of legislation that is widely credited with stimulating significant growth in university– industry technology transfer and research collaboration in the US. We examine the effects of Bayh-Dole on university– industry collaboration and technology transfer in the US, emphasizing the lengthy history of both activities prior to 1980 and noting the extent to which these activities are rooted in the incentives created by the unusual scale and structure (by com-parison with Western Europe or Japan) of the US higher edu-cation system. Efforts at ‘‘emulation’ ’ of the Bayh-Dole policy elsewhere in the OECD are likely to have modest success at best without greater attention to the underlying structural dif-ferences among the higher education systems of these nations.

Very preliminary: Comments are most welcome, but please do not cite. Abstract China's patent explosion is seemingly paradoxical given the country's weak record of protecting intellectual property rights. Using a firm-level data set that spans the population of China's large and medium size industrial enterprises, this paper seeks to understand the factors that account for China's patent boom. While the intensification of research and development (R&D) in the Chinese economy -a doubling of the R&D to GDP ratio since 1985 -tracks with patenting activity, it is unlikely to be the principal cause of the patent explosion. Instead this paper finds that the growing intensity of foreign direct investment at the industry level in China is prompting domestic Chinese firms to file for more patent applications for their strategic competitive value. Amendments to the patent law that favor patent holders and ownership reform that has clarified the assignment of property rights also emerge as significant sources of China's surge in patent activity.

This paper tests hypotheses that in inter-firm alliances innovative performance is an inverted-U shaped function of cognitive distance, that the resulting optimal cognitive distance is higher for exploratory than for exploitative learning, and that optimal cognitive distance depends on absorptive capacity. Most hypotheses are confirmed for 994 alliances in several industries, in the period 1986-1996. The results indicate a new hypothesis that with more knowledge one needs larger cognitive distances to find novelty.