Patent Protection and Software Innovation: Evidence from Alice

17 Pages Posted: 18 Nov 2020

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

Although software innovations are the cornerstone in the modern economy, their patent-ability, as well as the social and private value of software patenting, have continued to be at the center of policy debates pertaining to the U.S. patent system. The landmark 2014 U.S. Supreme Court ruling in Alice v. CLS Bank had profound impact on software patenting as it drastically limited the scope of patent protection on software innovations. Using Alice as a natural experiment, we found that limiting software patents had no detectable downsides to the value of software firms. Instead, it was associated with improved sales, greater engagements in open source development, and tighter scope of individual patents. Our findings offer implications for the extent to which software firms pursue patenting as a strategy to protect innovation versus pursuing alternative appropriability mechanisms. They also have compelling implications for patent policies on software and software-related inventions, such as artificial intelligence, business methods, 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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