Innovation and Patents

Abstract

This chapter summarizes historical evidence on the link between patent laws and innovation. Earlier historical analyses have emphasized the importance of patent laws in encouraging innovation. Data on exhibits at international technology fairs, such as the 1851 Crystal Palace world’s fair, however, indicate that only a small share of innovations are patented and that non-patent mechanisms may play an important role in encouraging innovation. They also show that inventors’ dependency on patents varies strongly across industries, so that radical changes in patent laws may influence the direction if not the level of technical change. Exhibition data also indicate that patents may play an important role in facilitating encouraging the diffusion of innovative activity by encouraging inventors to advertise their ideas. These results highlight the need for additional analyses of innovation that systematically analyze patents and alternative measures of innovation.

Keywords: Patents, innovation, fairs, exhibitions, technical change.

JEL Classification: K11, O31, O34