IIDS Lect 4_ Part 4: Entrepreneurial performance: Innovation (Patenting…
IIDS Lect 4_ Part 4: Entrepreneurial performance: Innovation
Patenting and infringing (2/3)
One of the biggest misunderstandings of patent law is the relationship between the
of an invention, and the
of another patent.
Example: Who can make a frosted light bulb?Nobody.
an existing patent if it contains all of the elements of a claim.
==>These issues are
of each other.
==>If a company owns a patent, it does not mean that you can actually build a product with it. You need „freedom to operate“.
An invention may be
if it can be distinguished from previous inventions.
Patent law around the world
Almost every country has its
governing patent protection.
A Patent granted in one country
provide protection in other countries. People or firms seeking patent protection in multiple countries must
apply for a patent in each of these
countries in accordance with those countries‘ requirements.
national exclusion rights
. There is no “World Patent“ or “International Patent“
==> However, there are application procedures that simplify obtaining patents in several countries or regions (e.g., EPO)
==> Several international treaties seek to harmonize patent laws around the world (Paris convention, PCT)
Slide 38/57 Patents tend to be the least emphasized mechanism by firms in the majority of manufacturing industries, and secrecy and lead time tend to be emphasized most heavily.
Patent protection and alternatives (2/4)
Rather than disclose information about a product in exchange for a patent, a firm can protect its IP by
(e.g., Coca-Cola‘s formula) and
to protect innovations.
Other appropriability mechanisms include
lead time advantages or complementary sales/services.
Protection mechanisms and their effectiveness vary significantly both within and across industries:
Patents effective in pharmaceuticals, not effective in electronics (discrete vs. Complex technologies).
Secrecy only effective if reverse engineering not possible.
In competitive situations protecting may not be as desirable as
liberally diffusing it (dominant design).
Effectiveness of a protection mechanism depends on contextual factors:
Tight vs. loose regime
Large vs. small size
Dynamics of technology and industry
Fast-paced vs. slow-paced industry
Presence of network effects
Type of technology
Complex vs. discrete technologies
See slides 41- 44