Patent Publication and the Market for Ideas

37 Pages Posted: 13 Jul 2013 Last revised: 23 Feb 2016

See all articles by Deepak Hegde

Deepak Hegde

New York University (NYU) - Leonard N. Stern School of Business

Hong Luo

Harvard Business School - Strategy Unit

Date Written: February 8, 2016

Abstract

In this paper, we study the effect of invention disclosure through patent publication on the market for ideas. We do so by analyzing the effects of the American Inventor’s Protection Act of 1999 (AIPA) — which required US patent applications to be published 18 months after their filing date rather than at patent grant — on the timing of licensing deals in the biomedical industry. We find that post-AIPA US patent applications are significantly more likely to be licensed before patent grant and shortly after 18- month publication. Licensing delays are reduced by about ten months, on average, after AIPA’s enactment. These findings suggest a hitherto unexplored benefit of the patent system: by requiring inventions to be published through a credible, standardized, and centralized repository, it mitigates information costs for buyers and sellers and, thus, facilitates transactions in the market for ideas.

Keywords: Patents, Licensing, Innovation, The American Inventor's Protection Act

JEL Classification: O31, O32, O34, O38

Suggested Citation

Hegde, Deepak and Luo, Hong, Patent Publication and the Market for Ideas (February 8, 2016). Harvard Business School Strategy Unit Working Paper No. 14-019. Available at SSRN: https://ssrn.com/abstract=2293225 or http://dx.doi.org/10.2139/ssrn.2293225

Deepak Hegde (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Hong Luo

Harvard Business School - Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States

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