Patent Protection and Software Innovation: Evidence from Alice

33 Pages Posted: 18 Nov 2020 Last revised: 9 Mar 2021

See all articles by Yu-Kai Lin

Yu-Kai Lin

Georgia State University - J. Mack Robinson College of Business

Arun Rai

Georgia State University - J. Mack Robinson College of Business

Date Written: September 9, 2020

Abstract

Software innovations make up a cornerstone of the digital economy. The scope of their patent protection and the social and private value of software patenting are central to recent policy debates in the United States. The landmark 2014 U.S. Supreme Court ruling in Alice v. CLS Bank had a profound impact on software patenting, drastically narrowing the scope of patent protection on software innovations. Using Alice as a natural experiment, we found that narrowing the scope of software patents had no detectable downside for the value of software firms. Instead, it was associated with improved sales, a greater degree of open-source engagement, and a narrower scope of individual patents. Findings from this research note add to the software patent literature and offer renewed evidence of the roles of patents for software innovations in the digital economy. They also have compelling implications for patent policies on software and software-related inventions, such as artificial intelligence, big data, cloud computing, and other emerging digital innovations.

Keywords: Innovations, Software Patents, Alice, Natural Experiment

Suggested Citation

Lin, Yu-Kai and Rai, Arun, Patent Protection and Software Innovation: Evidence from Alice (September 9, 2020). Available at SSRN: https://ssrn.com/abstract=3703055 or http://dx.doi.org/10.2139/ssrn.3703055

Yu-Kai Lin (Contact Author)

Georgia State University - J. Mack Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States

HOME PAGE: http://robinson.gsu.edu/profile/yu-kai-lin/

Arun Rai

Georgia State University - J. Mack Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States

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