Business Commons^™

Anti-Patents, Roy Baharad, Stuart Minor Benjamin, Ehud Gutte

Faculty Scholarship

Conventional wisdom has long perceived the patent and tort systems as separate legal entities, each tasked with a starkly different mission. Patent law rewards novel ideas; tort law deters harmful conduct. Against this backdrop, this Essay uncovers the opposing effects of patent and tort law on innovation, introducing the "injurer-innovator problem." Patent law incentivizes injurers --often uniquely positioned to make technological breakthroughs--by allowing them to profit from licensing their inventions to competitors. Yet tort law, by imposing liability for failures to invest in care, forces injurers to incur the cost of implementing their own innovations. When the cost of self-implementation …

A Critical Librarianship Approach For Teaching Patent Searching: Who Becomes An Inventor In America?, Dave Zwicky, Ilana Stonebraker

Libraries Faculty and Staff Scholarship and Research

The ways in which a technology is invented, owned, and approved are strongly influenced by the same oppressive and exclusionary structures that critical librarianship interrogates. Patents, limited-term grants of rights to inventions, are issued to inventors in exchange for detailed specifications of the invention. This paper examines current practices used by business librarians in teaching students how to find patents and how these practices could be critically informed given the nature of the United States patent system as it exists today. An output of this work is a suggested lesson plan with recommended resources.

“High” Innovators? Marijuana Legalization And Regional Innovation, Stephanihe Cheng, Pengkai Lin, Yinliang Tan, Yuchen Zhang

Research Collection School Of Accountancy

The past three decades have witnessed a tremendous shift in public health policies towards marijuana legalization in the U.S. Adopting the process-based view of innovation, we hypothesize that marijuana's increased use and related consequences after its legalization affect innovators’ behavior and social environment during the innovation process, which in turn impacts regional innovation. Utilizing the staggered adoption of medical marijuana laws by 20 states between 1996 and 2013 as a quasi-experimental setting, we find that legalizing medical marijuana reduces the overall output of regional innovation, as proxied by patents’ total forward-citation count aggregated by innovator location. Further analyses decomposing the …

Antitrust Interoperability Remedies, Herbert J. Hovenkamp

All Faculty Scholarship

Compelled interoperability can be a useful remedy for dominant firms, including large digital platforms, who violate the antitrust laws. They can address competition concerns without interfering unnecessarily with the structures that make digital platforms attractive and that have contributed so much to economic growth.

Given the wide variety of structures and business models for big tech, “interoperability” must be defined broadly. It can realistically include everything from “dynamic” interoperability that requires real time sharing of data and operations, to “static” interoperability which requires portability but not necessarily real time interactions. Also included are the compelled sharing of intellectual property or …

Knowledge Recombination And Inventor Networks: The Asymmetric Effects Of Embeddedness On Knowledge Reuse And Impact, Simon J.D. Schillebeeckx, Yimin Lin, Gerard George, Tufool Alnuaimi

Research Collection Lee Kong Chian School Of Business

Inventors are triply embedded. They are embedded in a network of knowledge components that they can reuse in future inventions. They are embedded in an inventor network, where internal embeddedness (the strength of relationships between focal inventors and their colleagues upon whose knowledge the team builds) and network centrality influence access to information. Finally, they are embedded in the firm, with its specific routines that favor external or internal knowledge search, what we call search orientation. Using a sample of 39,785 semiconductor patents, we study the pattern of knowledge reuse, or the recombination of technologically similar components, on invention impact. …

Do Innovative Firms Communicate More? Evidence From The Relation Between Patenting And Management Guidance, Sterling Huang, Jeffrey Ng, Tharindra Ranashinghe, Mingyue Zhang

Research Collection School Of Accountancy

Successful innovations could induce more disclosure if the information asymmetry between the firm and its investors about post-innovation outcomes leads investors to demand more information. However, such innovations also likely entail greater proprietary cost concerns, which deter disclosure. This paper uses patent grants to examine the effect of innovation success on management guidance behavior. We find that more management guidance follows patent grants, suggesting that despite disclosure cost concerns, firms with successful innovations do respond to information demand. This association is stronger after enactment of Regulation Fair Disclosure and for firms with greater institutional investor ownership, further highlighting the role …

The Innovation Effect Of Dual-Class Shares: New Evidence From Us Firms, Xiaping Cao, Tiecheng Leng, Jeremy C. Goh, Paul Malatesta

Research Collection Lee Kong Chian School Of Business

The proliferation of dual-class structures in the US stock market presents a controversial trend since such shares are traditionally deemed to damage governance quality. We study the relationship between 362 firms with dual-class shares and their innovativeness using patent citations from Google Patents over the 1976 through 2006 period. We find dual-class shares have significant innovation effect in high-tech sectors, hard-to-innovate industries, firms with higher external takeover threat and firms heavily dependent on external equity financing. We also document a positive causality relationship between dual-class structures and the quality of innovation. The channel for this causal relationship is the protection …

Justice Department's New Position On Patents, Standard Setting, And Injunctions, Herbert J. Hovenkamp

All Faculty Scholarship

A deep split in American innovation policy has arisen between new economy and old economy innovation. In a recent policy statement, the Antitrust Division of the Justice Department takes a position that tilts more toward the old economy. Its December, 2019, policy statement on remedies for Standard Essential Patents issued jointly with the U.S. Patent and Trademark Office and the National Institute of Standards and Technology reflects this movement.

The policy statement as a whole contains two noteworthy problems: one is a glaring omission, and the other is a mischaracterization of the scope of antitrust liability. Both positions are strongly …

Frand And Antitrust, Herbert J. Hovenkamp

All Faculty Scholarship

This paper considers when a patentee’s violation of a FRAND commitment also violates the antitrust laws. It warns against two extremes. First, is thinking that any violation of a FRAND obligation is an antitrust violation as well. FRAND obligations are contractual, and most breaches of contract do not violate antitrust law. The other extreme is thinking that, because a FRAND violation is a breach of contract, it cannot also be an antitrust violation.

Every antitrust case must consider the market environment in which conduct is to be evaluated. SSOs operated by multiple firms are joint ventures. Antitrust’s role is to …

When Do Expert Teams Fail To Create Impactful Inventions?, Simon J.D. Schillebeeckx, Yimin Lin, Gerard George

Research Collection Lee Kong Chian School Of Business

We investigate the salience of expertise in creating high impact inventions and question experts’ ability to deploy novel ideas. Specifically, we examine the relationships between expertise, component originality, and a team's structural holes’ position in the collaborative network and propose that, in relative terms, expert teams create lower impact inventions if they deploy more original components and if they occupy structural holes. We test and confirm our hypotheses in a sample of semiconductor firms. In post‐hoc analyses, we find a three‐way interaction where the negative effect of structural holes almost disappears when an expert team experiments with original components whereas …

Can Mergers And Acquisitions Internalize Positive Externalities In Funding Innovation?, Leo Li, Mark Liu

Institute for the Study of Free Enterprise Working Papers

Fundamental innovation usually involves huge upfront costs, but the benefits are spread across various sectors of the economy. Given the large costs and limited appropriability of the benefits associated with the innovation, individual firms underinvest in these innovations relative to the socially optimal level. We find that mergers and acquisitions (M&As) can internalize the positive externalities by merging firms from both the user industries and the producer industries of an innovation. Using the US patent citation dataset, we define the user and producer relationship between each pair of industries and between each pair of industry and technological class. We then …

Intellectual Property And Competition, Herbert J. Hovenkamp

All Faculty Scholarship

A legal system that relies on private property rights to promote economic development must consider that profits can come from two different sources. First, both competition under constant technology and innovation promote economic growth by granting many of the returns to the successful developer. Competition and innovation both increase output, whether measured by quantity or quality. Second, however, profits can come from practices that reduce output, in some cases by reducing quantity, or in others by reducing innovation.

IP rights and competition policy were traditionally regarded as in conflict. IP rights create monopoly, which was thought to be inimical to …

Intellectual Property: Ownership And Protection In A University Setting, Cynthia L. Dahl

All Faculty Scholarship

Before an academic entrepreneur may protect or commercialize an invention, they must understand if they own the rights to it. This short chapter helps the inventor to consider the various scenarios that occur in a university setting. It advises the inventor how to seek a waiver from the university if they believe they are the true owner of the invention. If the facts indicate that the invention should be owned by the university, the chapter also discusses how a university decides to formally protect the invention through patent or copyright. Finally, the chapter advises the inventor how to stay involved …

Exploring The Sources Of Design Innovations: Insights From The Computer, Communications And Audio Equipment Industries, Sujan M. Dan, Brian I. Spaid, Charles H. Noble

Marketing Faculty Research and Publications

Whereas business research has focused on the impact of design innovations on market response and financial performance, the sources of design innovations, as opposed to those of technological innovations, have largely escaped investigation. In this research, we examine the organizational, financial, and environmental drivers of design innovations and how they contrast to technological innovations. Our study utilizes a unique dataset encompassing a 10-year window of innovation output drawn from the computer, communications, and audio and video equipment manufacturing industries. Our results suggest that design innovations are driven primarily by investments in research and development and slack organizational resources. Interestingly, we …

Regulation And The Marginalist Revolution, Herbert J. Hovenkamp

All Faculty Scholarship

The marginalist revolution in economics became the foundation for the modern regulatory State with its “mixed” economy. Marginalism, whose development defines the boundary between classical political economy and neoclassical economics, completely overturned economists’ theory of value. It developed in the late nineteenth century in England, the Continent and the United States. For the classical political economists, value was a function of past averages. One good example is the wage-fund theory, which saw the optimal rate of wages as a function of the firm’s ability to save from previous profits. Another is the theory of corporate finance, which assessed a corporation’s …

The Rule Of Reason, Herbert J. Hovenkamp

All Faculty Scholarship

Antitrust’s rule of reason was born out of a thirty-year (1897-1927) division among Supreme Court Justices about the proper way to assess multi-firm restraints on competition. By the late 1920s the basic contours of the rule for restraints among competitors was roughly established. Antitrust policy toward vertical restraints remained much more unstable, however, largely because their effects were so poorly understood.

This article provides a litigation field guide for antitrust claims under the rule of reason – or more precisely, for situations when application of the rule of reason is likely. At the time pleadings are drafted and even up …

Reasonable Patent Exhaustion, Herbert J. Hovenkamp

All Faculty Scholarship

A lengthy tug of war between the Supreme Court and the Federal Circuit Court of Appeals may have ended when the Supreme Court held that the sale of a patented article exhausts the patentee seller’s rights to enforce restrictions on that article through patent infringement suits. Further, reversing the Federal Circuit, the parties cannot bargain around this rule through the seller’s specification of conditions stated at the time of sale, no matter how clear. No inquiry need be made into the patentee’s market power, anticompetitive effects, or other types of harms, whether enforcement of the condition is socially costly or …

Emerging Research Institutions' Technology Transfer Supply Chain Networks' Sustainability Budget Resource Planning Tool Development, Clovia Hamilton

Winthrop Faculty and Staff Publications

Emerging Research Institution (ERls) can benefit from patent licensing revenues from the transfer f patented technologies into the commercial marketplace because these added revenues can help research institutions become more sustainable financially. However, many ERls struggle to succeed in technology transfer. This study describes the development of a university technology transfer supply chain network sustainability tool that private and public ERls can use to become more self-reliant financially. Historically black colleges and universities (HBCUs) are ERls and are used as a case study. HBCUs lag behind their peer non-HBCUs because historically they have been under-served and were originally established largely …

The Uneasy Case For Patent Federalism, Roger Allan Ford

Law Faculty Scholarship

Nationwide uniformity is often considered an essential feature of the patent system, necessary to fulfill that system’s disclosure and incentive purposes. In the last few years, however, more than half the states have enacted laws that seek to disrupt this uniformity by making it harder for patent holders to enforce their patents. There is an easy case to be made against giving states greater authority over the patent system: doing so would threaten to disrupt the system’s balance between innovation incentives and a robust public domain and would permit rent seeking by states that disproportionately produce or consume innovation.

There …

Buying Monopoly: Antitrust Limits On Damages For Externally Acquired Patents, Erik N. Hovenkamp, Herbert J. Hovenkamp

All Faculty Scholarship

The “monopoly” authorized by the Patent Act refers to the exclusionary power of individual patents. That is not the same thing as the acquisition of individual patent rights into portfolios that dominate a market, something that the Patent Act never justifies and that the antitrust laws rightfully prohibit.

Most patent assignments are procompetitive and serve to promote the efficient commercialization of patented inventions. However, patent acquisitions may also be used to combine substitute patents from external patentees, giving the acquirer an unearned monopoly position in the relevant technology market. A producer requires only one of the substitutes, but by acquiring …

Appropriability And The Retrieval Of Knowledge After Spillovers, Tufool Alnuaimi, Gerard George

Research Collection Lee Kong Chian School Of Business

Firms create and capture value through innovation. In technology-driven firms, there has been an explicit emphasis on appropriability through imitation deterrence and cumulative inventions that build on prior firm innovation. We introduce systematic empirical evidence for a third mechanism of appropriability namely, knowledge retrieval, which is defined as the re-absorption of previously spilled knowledge. We extend previous studies which consider technological complexity and organizational coupling as predictors of appropriability by examining their impact on knowledge retrieval. We find that technological complexity has a curvilinear relationship with retrieval while organizational coupling has a negative relationship. We discuss the implications of these …

The Patent Spiral, Roger Allan Ford

Law Faculty Scholarship

Examination — the process of reviewing a patent application and deciding whether to grant the requested patent — improves patent quality in two ways. It acts as a substantive screen, filtering out meritless applications and improving meritorious ones. It also acts as a costly screen, discouraging applicants from seeking low-value patents. Yet despite these dual roles, the patent system has a substantial quality problem: it is both too easy to get a patent (because examiners grant invalid patents that should be filtered out by a substantive screen) and too cheap to do so (because examiners grant low-value nuisance patents that …

A Handbook For Inventors And Innovators: Technology Commercialization At The University Of Nebraska–Lincoln

NUtech Ventures: Publications

OVERVIEW: Director’s Message * Commercialization * Technology Transfer Process * Benefits * Resources

SPONSORED RESEARCH: Process * Bayh-Dole Act * Funding Resources

INVENTION DISCLOSURE: Who * What * When * Why

INTELLECTUAL PROPERTY: Patent * Other Forms of Intellectual Property * Criteria * Barriers to Patenting * Life of a Patent * University Ownership

COMMERCIALIZATION: Licenses and Licensing Process

NUtech Ventures’ mission is to commercialize technologies generated from the research and creative activities of the University of Nebraska–Lincoln. Namely, NUtech Ventures seeks to facilitate the transfer of innovations from the “lab to the marketplace” for the benefit of society. This …

Comment To The Sec In Support Of The Enhanced Disclosure Of Patent And Technology License Information, Colleen V. Chien, Jorge Contreras, Carol Corrado, Stuart Graham, Deepak Hedge, Arti K. Rai, Saurabh Vishnubhakat

Faculty Scholarship

Intangible assets like IP constitute a large share of the value of firms, and the US economy generally. Accurate information on the intellectual property (IP) holdings and transactions of publicly-traded firms facilitates price discovery in the market and reduces transaction costs. While public understanding of the innovation economy has been expanded by a large stream of empirical research using patent data, and more recently trademark information this research is only as good as the accuracy and completeness of the data it builds upon. In contrast with information about patents and trademarks, good information about IP licensing is much less publicly …

University Technology Transfer Information Processing From The Attention Based View, Clovia Hamilton

Winthrop Faculty and Staff Publications

Between 2005 and 2011, there was no substantial growth in licenses executed by university technology transfer offices. Since the passage of the Bayh Dole Act of 1980, universities have owned technological inventions afforded by federal research funding. There are still university technology transfer offices that struggle with increasing their licensing revenues. There is a persistent underperformance by university technology transfer offices. This paper makes the contribution of advocating the novel use of cognitive thinking’s attention based view to university technology transfer in order to resolve this problem. The attention based view teaches that human attention is limited and organizations are …

Patents, Innovation, And Performance Of Venture Capital-Backed Ipos, Jerry X. Cao, Fuwei Jiang, Jay R Ritter

Research Collection Lee Kong Chian School Of Business

We study the predictive power of patents on the long-run performance of venture capital (VC)-backed initial public offerings (IPOs). We show that VC-backed IPOs that have at least one patent at the time of the IPO substantially outperform other VC-backed IPOs, with 3-year buy-and-hold market-adjusted returns of -7.1% vs. -23.3%. On average, VC-backed IPOs without patents perform similarly to non-VC-backed IPOs. We also report that VC-backed IPOs from 1981-1998 outperformed other IPOs, but the pattern has reversed for IPOs from 1999-2006. Although a smaller proportion of non-VC-backed IPOs possess patents, those with patents also outperform those without patents.

Antitrust And The Patent System: A Reexamination, Herbert J. Hovenkamp

All Faculty Scholarship

Since the federal antitrust laws were first passed they have cycled through extreme positions on the relationship between competition law and the patent system. Previous studies of antitrust and patents have generally assumed that patents are valid, discrete, and generally of high quality in the sense that they further innovation. As a result, increasing the returns to patenting increases the incentive to do socially valuable innovation. Further, if the returns to the patentee exceed the social losses caused by increased exclusion, the tradeoff is positive and antitrust should not interfere. If a patent does nothing to further innovation, however, then …

The Rule Of Reason And The Scope Of The Patent, Herbert J. Hovenkamp

All Faculty Scholarship

For a century and a half the Supreme Court has described perceived patent abuses as conduct that reaches "beyond the scope of the patent." That phrase, which evokes an image of boundary lines in real property, has been applied to both government and private activity and has many different meanings. It has been used offensively to conclude that certain patent uses are unlawful because they extend beyond the scope of the patent. It is also used defensively to characterize activities as lawful if they do not extend beyond the patent's scope. In the first half of the twentieth century the …

Teece's Competing Through Innovation, Herbert J. Hovenkamp

All Faculty Scholarship

This essay reviews David J. Teece's book, Competing Through Innovation: Technological Strategies and Antitrust Policies (2013).

Patents As Business Intelligence Tools, Amy Jansen

Librarian Publications

As most entrepreneurs and business owners can tell you, one of the most significant considerations that companies face is how to protect their work. Managing intellectual property is now integrated with overall business models and corporate strategy. For this reason, patents have become crucial strategic pieces in business and competitive intelligence in the twenty-first century. Having the right patents, and even more importantly, knowing how to use them can either bolster or harm a company. As technology and rapid advancements in innovation become the cornerstone of corporate success, companies’ research and development (R & D) and patent spending have become …