Compulsory Licensing: Evidence from the Trading with the Enemy Act

Abstract:     
Compulsory licensing allows firms in developing countries to produce foreign-owned inventions without the consent of foreign patent owners. This paper uses an exogenous event of compulsory licensing after World War I under the Trading with the Enemy Act to examine the long run effects of compulsory licensing on domestic invention. Difference-in-differences analyses of nearly 200,000 chemical inventions suggest that compulsory licensing increased domestic invention by at least 20 percent.

Keywords: Compulsory licensing, licensing, patent law, innovation, invention, TRIPS

JEL Classifications: O3, O34, O12, N00, N42, I10, I18, K33

Working Paper Series