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Patent Breadth, Patent Life, and the Pace of Technological Progress

Posted: 27 Jan 1999  

Ted O'Donoghue

Cornell University - Department of Economics

Suzanne Scotchmer

University of California - Department of Economics ; School of Law, University of California, Berkeley; National Bureau of Economic Research (NBER)

Jacques-François Thisse

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE); Centre for Economic Policy Research (CEPR)

Abstract

In active investment climates where firms sequentially improve each other's products, a patent can terminate either because it expires or because a noninfringing innovation displaces its product in the market. We define the length of time until one of these happens as the effective patent life, and show how it depends on patent breadth. We distinguish "lagging" breadth, which protects against imitation, from "leading" breadth, which protects against new improved products. We compare two types of patent policy with leading breadth: (i) patents are finite but very broad, so that the effective life of a patent coincides with its statutory life, and (ii) patents are long but narrow, so that the effective life of a patent ends when a better product replaces it. The former policy improves the diffusion of new products, but the latter has lower R&D costs.

JEL Classification: O31

Suggested Citation

O'Donoghue, Ted and Scotchmer, Suzanne and Thisse, Jacques-François, Patent Breadth, Patent Life, and the Pace of Technological Progress. Journal of Economics and Management Strategy, Vol. 7, No. 1, 1998. Available at SSRN: https://ssrn.com/abstract=145148

Ted O'Donoghue (Contact Author)

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-6287 (Phone)
607-255-2818 (Fax)

Suzanne Scotchmer

University of California - Department of Economics ( email )

Berkeley, CA 94720-3880
United States
510-643-8562 (Phone)

School of Law, University of California, Berkeley ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jacques-François Thisse

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium
+32 10 47 4312 (Phone)
+32 10 47 4301 (Fax)

HOME PAGE: http://www.core.ucl.ac.be/staff/thisse.html

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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