Imitation and Valuation of Novel Designs

47 Pages Posted: 5 May 2020 Last revised: 21 Nov 2022

See all articles by Tian Heong Chan

Tian Heong Chan

Emory University - Goizueta Business School

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance; National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Kevin Tseng

National Taiwan University - Department of Finance; National Taiwan University - Center for Research in Econometric Theory and Applications

Date Written: November 17, 2022

Abstract

Novel designs have been susceptible to imitations with minor modifications until 2008: that year, an unexpected Federal Circuit Court of Appeals decision effectively clarified the protection scope of designs. We show empirical evidence that the decision enhanced the protection for novel designs with more features: they become more valuable and are subject to fewer imitations after this decision. We then show that these benefits aggregate to the firm level: the market values of firms owning a larger stock of design features increase relatively more after this decision. Finally, we show that the decision changes firm operations: firms with a larger stock of design features became more profitable, and more active in exploring new product and technological innovations, after this decision.

Keywords: product design, imitation, patent scope, market competition

JEL Classification: G18, K11, L51, O34

Suggested Citation

Chan, Tian Heong and Hsu, Po-Hsuan and Tseng, Kevin, Imitation and Valuation of Novel Designs (November 17, 2022). Available at SSRN: https://ssrn.com/abstract=3574702 or http://dx.doi.org/10.2139/ssrn.3574702

Tian Heong Chan

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Kevin Tseng (Contact Author)

National Taiwan University - Department of Finance ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

National Taiwan University - Center for Research in Econometric Theory and Applications ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

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