Imperfect Information, Patent Publication, and the Market for Ideas
New York University (NYU) - Leonard N. Stern School of Business
Harvard Business School - Strategy Unit
August 31, 2013
Harvard Business School Strategy Unit Working Paper No. 14-019
We investigate the role of an important information-disclosure mechanism — patent publication — in the market for ideas. We do so by analyzing the effects of the American Inventors Protection Act (AIPA), which required, as of November 29, 2000, that U.S. patent applications be published 18 months after their filing rather than at the time of patent grant. We develop a theoretical framework that yields predictions about the effects of AIPA on the timing of licensing, and test the predictions using a sample of 339 licenses of biomedical inventions protected by patent applications filed between 1995 and 2005. We find that post-AIPA patent applications experience a sharp increase in the probability of licensing after 18-month publication, and, on average, are licensed about 8.5 months sooner than pre-AIPA patent applications. Thus, information disclosure through patent publications appears to facilitate transactions in the market for ideas and significantly accelerate the commercialization of inventions.
Number of Pages in PDF File: 46
Keywords: Patents, Licensing, The American Inventor's Protection Act
JEL Classification: O31, O32, O34, O38working papers series
Date posted: July 13, 2013 ; Last revised: September 4, 2013
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