Economics of the Independent Invention Defense Under Incomplete Information

25 Pages Posted: 6 Apr 2011 Last revised: 3 Jan 2015

See all articles by Murat C. Mungan

Murat C. Mungan

George Mason University - Antonin Scalia Law School, Faculty

Date Written: February 19, 2011

Abstract

Patents lead to ex-post dead-weight losses arising from a non-competitive market structure for the invention. Many have argued that introducing independent invention as a defense (IID) to patent infringement can increase social welfare by decreasing such dead-weight losses at the price of a modest decrease in the number of inventions. This paper considers the effects of IID in a setting where R&D …firms have incomplete information about their rivals. Four main results follow under incomplete information: (i) Fewer things are invented under an IID regime, (ii) IID’s effects on welfare are ambiguous, (iii) IID is more likely to increase welfare if gains from competition in the product market are high, and (iv) determining precise conditions under which IID performs better than the current regime requires access to data which is extremely hard to …find and quantify.

Keywords: Patents, Independent Invention, Incomplete Information

JEL Classification: H0, K0, L0, L5, O3, O31

Suggested Citation

Mungan, Murat C., Economics of the Independent Invention Defense Under Incomplete Information (February 19, 2011). Supreme Court Economic Review, Vol. 20, 2012. Available at SSRN: https://ssrn.com/abstract=1803207

Murat C. Mungan (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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