Comments for Patent races: pros and cons Narjiss Dhibat 24 March 2018 I know that patent activity all around the word worldwide has accelerated dramatically since the 1990s, especially with the adoption of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the increasing internationalization of patent protection under regional and international patent instruments; The growing number of patents can be seen as an indicator of inventive activity,…Read moreI know that patent activity all around the word worldwide has accelerated dramatically since the 1990s, especially with the adoption of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the increasing internationalization of patent protection under regional and international patent instruments; The growing number of patents can be seen as an indicator of inventive activity, but such a rapid expansion has also generated systemic problems, including a significant backlog in patent offices and questions as to the quality and value of many patents . Cosmetics industry is very much based on patents, if not they will be no innovative and revolutionary products. You see, patent protection clearly became more important to these companies over the last 20 years with activity for perfumes constituting an emerging area. Between 1990 and January 2010 190,287 , their publications for cosmetics and perfumes were published in the major patent office’s rising to 329,983 publications worldwide. Activity is concentrated in cosmetics, notably skin care and hair products. Perfumes represent 9,942 patent publications in the main jurisdictions and 16,158 worldwide. A major proportion of patent activity for cosmetics, and to a lesser extent perfumes, involves ingredients and extracts of natural origin. Natural ingredients and extracts from all sources accounted for 49% of activity. Natural ingredients and extracts from plants accounted for approximately 34% of patent activity. In practice, the 34% of patent documents involving extracts and ingredients from plants is a conservative estimate. Nevertheless it demonstrates the importance of patent activity originating from biodiversity within these sectors. Let us take the example of L’Oreal who has patented an emulsion lipstick composition which is very radical. Every lipstick on the market today is made of some kind of wax or another, so if we could make one from an emulsion we would have water in the formulation. This might have some big advantages because we could quite likely get some new shade options for a start. It is bound to have a very different user experience, and the film left on the lips would probably be a lot thinner. http://www.scielo.br/pdf/bjps/v47n4/05.pdf http://ethicalbiotrade.org/dl/public-and-outreach/UEBT%20Trends%20Patents%20Activity%20Note%201%20of%204.pdf https://WWW.COSMETICSDESIGN-EUROPE.COM/ARTICLE/2015/05/07/PATENTING-NATURAL-COSMETICS-INGREDIENTS-IS-BIG-BUSINESS http://www.fpapatents.com/resource?id=370 Show less Reply Paul Belleflamme 26 March 2018 Good example! I like the scent of your comment 😉 Jordan 23 March 2018 Like Robert Solow said, innovation (without conpting on capital et work) is the only way that can explain growth. Innovation take more and more place in every compagny who is looking for a position of leader of his market. We have seen in previous article that, some compagnies ( the biggest one) could not have the incentive to…Read moreLike Robert Solow said, innovation (without conpting on capital et work) is the only way that can explain growth. Innovation take more and more place in every compagny who is looking for a position of leader of his market. We have seen in previous article that, some compagnies ( the biggest one) could not have the incentive to innovate due to the fact that profit are more benefic to the concurrent than himself. But for providing the well being of the economy and consumers it’s preferable on a moral point ,for them to innovate to maintain their leadership and because they are the only the ones who has the most capacity to innovate contrary to a start up who has less means to do it. Concerning the race of patent in this article, the smartphone sector is one of the most famous sector where each brand are racing to have the newest innovation that can allow them to have an advantage against his concurrency. The most iconic example is Samsung and Iphone. Every years, the launch of their flagship has brings before to a pattent war and race of patent to capture the new invention made by themself or little start-up they have bought. Beginning from the visual of these phone to this years, where we have seen that Samsung is developping phones with foldable screen, this innovation will be followed by other brand withouh doubt sector as it is very conccurential sector. Nevertheless discuss about race of patent is for me inapropriate. This races of patent isn’t destinate to everybody. In deed, she has a certain entry cost, and its finaly an inequal race between big firms who had bought the smallest ones. Take a example A big compagy and a smallest one races for a patent . Even if the smallest win this race or this fight she would certaintly not win the war , because of many fact, -The means they use to the innovate isn’t the same proportionnaly to the biggest ( the capacity to innovate could take 45 % of means from the smallest firms , whereas it’s only take 15 % for the bigger firm). Wrong innovation could be destructive for the future of the start-up unlike a bigger one who could rebound on something else. -There could have a certain degree of dependance with big compagnies due to the fact that incentive for a start up to innovate is very important unlike a big one who could have no interest to invest and so far not create transfer of technlogy who could allow start up to develop because of the lack of means they have. – And the main reason that this is a inequal races is that ,most of the time, when a small firm has a asset who could allow him to change his position in the market (if the patent isn’t already patent trolled by compagny) and his enhance his power in the market ; this last is buy by the big compagny. All big firms use this technic and moreover it is now the regular way for global firms to improve themself by buying very innovative Start up. By doing this , its allow them to erase the competitors from the market by absorbing them. Apple has for example bought a very innovative israelite (anobit) start up compagny, producing flash memory essential for the his products, by doing this Apple capture all the patent, proceed and technologies created by anobit. It’s the same case in other sectors , Facebook has for example bought Whattapps ( an communication application), not only, for the use the innovative proceed but for erase a concurrent that could be dangerous for facebook.. But it is not necessarly a negative aspect of the capitalism ,even if the purpose of small compagny is to to developp in order to be the newest Apple or Samsung, we can assume the fact that being bought by big firms could be for them a honorable salut. In deed, it could allow them to have finally have the ressources they needed to developp their product and create more innovation and insofar, it can push ourself to ask more about a race of, which start up will be the first to be seen by the biggest compagnies. https://www.hbrfrance.fr/chroniques-experts/2015/02/6127-la-course-aux-brevets-un-pari-gagnant-pour-les-entreprises/ http://www.cnetfrance.fr/news/galaxy-x-le-smartphone-a-ecran-pliable-de-samsung-fut-discretement-presente-au-ces-2018-39862688.htm http://siliconwadi.fr/3426/apple-a-absorbe-sa-premiere-start-up-israelienne-anobit Show less Reply messad 23 March 2018 Patents are protections for companies to be rewarded; They encourage research and thus encourage the creation of new innovations. Also, in the following of the patent in the patent on innovation in the innovation period. All like the patent; the patent course as well advantages and disadvantages. The patent race forces new entrants into the walk to arrive with technology superior…Read morePatents are protections for companies to be rewarded; They encourage research and thus encourage the creation of new innovations. Also, in the following of the patent in the patent on innovation in the innovation period. All like the patent; the patent course as well advantages and disadvantages. The patent race forces new entrants into the walk to arrive with technology superior to that already in place in this case can say that the patent course stimulates innovation. But also by no longer keeping an invention patented and putting all the public’s disposition to be a factor that can boost innovation and improve it, that is what the company Tesla Motors, the premier producer of electric cars in the United States, she decided to put all these patents in the public domain. Therefore, it democratizes these creations in the but to have many actors on the market and makes it develop the market of the electric car. sources: Encyclopédie de l’innovation http://alireailleurs.tumblr.com/search/tesla+motors http://romainelubrique.org/brevets-domaine-public-tesla Show less Reply AEGERTER Noémi 22 March 2018 L’innovation is a major issue for businesses. Indeed, it is one of keys factors of growth, competitiveness, wealth, development and progress. Thus, companies use it like a strategic tool, allowing them to consolidate or gain a competitive advantage. As a result, some companies commit themselves in a patent race in which it determines the ressources needed to achieve the innovation.…Read moreL’innovation is a major issue for businesses. Indeed, it is one of keys factors of growth, competitiveness, wealth, development and progress. Thus, companies use it like a strategic tool, allowing them to consolidate or gain a competitive advantage. As a result, some companies commit themselves in a patent race in which it determines the ressources needed to achieve the innovation. In the field of technology, one of the fascinating struggle of the last year is artifical intelligence. It is a computer program/robot able to think and reflect by itself beyong its initial programming. AI is a vast field that affects not only computer science but also mathematics, neuroscience and even philosophy. Its development are numerous and sometimes suprising Let’s start with Google Brain. It is a deep learning led by Google since 2011. The goal of this research would be that the system learns from itself without being forced to inject data manually. Then we have the Blue Brain project, which is a project developed by the Ecole Polytechnique of Lausanne in Switzerland in 2005. As its name suggests, the concept was to create a synthetic brain. Furthermore, The NUPIC (Numenta Platform for intelligent computing) developped by the american company Numenta as an open source project for business. Basically, his role would be analyse the events in time and determine causes that could have provoked them. Another, the CYC (Cycorp making Solutions Better). It is the longest artificial intelligence project in the world. (launched in 1984). It was created in order to develop a large knowledge base. Basically it is possible to learn at CYC principles that will be useful to him to deduce certain things. It may be interesting to add that it is a common digital knowledge that other artificial intelligence might also use. Then, the Synthetic “Environment for Analysis and Simulations” or SEAS. This AI is currently being used by Homeland Security and the US Defense Department to simulate crises on the US mainland. SEAS allows you to collect real-time data to predict events that may be predicted in the future. Basically, the perfect clone of the real world. And finally, Mycin, which is an expert system. It would be abble to resonate as an expert in the field of medicine. This one is based on an inference engine. In fact, it makes deductions based on logicial resonance based on facts related to each other is database in order to reduce medical errors but it must still be perfected. As a result, these different projects have similar objectives : Developing artificial intelligence in all its forms and contributing to technical progress. But it takes time for an artificial intelligence to reach a certain maturity, it also requires heavy investments in research and development and presents numerous uncertainties and critics Sources : https://expertsystem101.weebly.com/mycin.html http://www.dodccrp.org/files/SEAS_Chaturvedi.pdf http://www.cyc.com https://www.numenta.org/implementations/ https://bluebrain.epfl.ch Show less Reply Cécilia Busardo 22 March 2018 To schematize patent races, we could imagine a bicycle race: competitors are working hard to end up by be the first. In case of patent races, firms are competing, they are doing everything they can do to be the first to get a patent. This strategy gives them the exclusivity on an emergent market and it ensures them to…Read moreTo schematize patent races, we could imagine a bicycle race: competitors are working hard to end up by be the first. In case of patent races, firms are competing, they are doing everything they can do to be the first to get a patent. This strategy gives them the exclusivity on an emergent market and it ensures them to be in a monopoly position for a certain period. Competition exists in every field of the nowadays’ industry. We assisted at the spectacular emergence of new technologies, a constant innovation about software or about our phones and everything related to technologies. This is a patent race clearly visible by every consumer because we are the origin of this race : firms tend to do their best to satisfy every new need and desire to keep their customers. However, there are also fields where we do not see the intense competition between firms, but it is clearly here. Let’s take the example of pharmaceutical industries : their innovation are vital for some, and they remain really useful for others. Considering the amount of money and time spent in R&D, obtaining a patent to protect the new drug is crucial for researchers. These races are mostly present in countries that are not totally well developed yet. For example, in India, we can assist to a race between five pharmaceutical firms that desire to take part of the growth and the progressive development of the country. These innovations are essential for the country’s welfare so the firms are doing their best to stay in the course. Another example, in Occident, biggest firms such as Google and Apple are trying to enter in the market of autonomous cars. We can wonder what their interest would be in going in a market that’s quite far from their principal activities. First of all, they benefit from the knowledge in technology, they have softwares and the intangible assets necessary to the entry in this kind of markets. It would make their brand quite visible too. But, they have a lot to lose if they failed compared to new startups that would only be in the market of autonomous cars. The common point of theses races and the problem it enlightens is the fact that this could be a brake to competition on the market. Of course, it increases innovation and R&D, but big firms already in place have the funds to pursue these researches comparing to startups. So, the strategy is quite simple : the monopoly would just have to buy the new company so there won’t be new competitor and the little firm would benefit from the fund of the big to exploit their idea. In my opinion, these races are good for the industry because it incentivizes firms to innovate and be the best. It promotes competition, and this is the best way to satisfy more consumers. However, as there are cons at every concept, I do think in this purchase of competition on the market, big one will always win so the little firms won’t have any real opportunity to grow up. Big firms tend to buy the little ones (ex. : Facebook bought Whatsapp) to eliminate potential competitors and keep their dominant position. Moreover, the desire to always innovate causes R&D costs that may not give return not investments as big as it costed. But, as there is competition in every sector, maybe every moment of our life (let’s take the example of Academia, or between employees in companies etc.), there will also have a race, a competition in the patent granting that is inevitable. https://kisspatent.com/blog/patents-in-the-pharmaceutical-industry-the-race-to-medical-innovation https://analyticsindiamag.com/top-5-ai-companies-in-india-creating-solutions-for-pharma-sector/ Cours Innovation Law and Economics, M. Paul Belleflamme, lecture 8 Show less Reply Coudray Morgane 16 March 2018 Like Mr. Belleflamme said, it's not easy to find clear examples of patent races. However, some situations can be considered as patent races because of the number of companies that spent a lot of money to reach the same goal. Let's talk about smart home. Nowadays, it seems that innovation has no limits in making the lives of its users more…Read moreLike Mr. Belleflamme said, it’s not easy to find clear examples of patent races. However, some situations can be considered as patent races because of the number of companies that spent a lot of money to reach the same goal. Let’s talk about smart home. Nowadays, it seems that innovation has no limits in making the lives of its users more comfortable. From the smart showerhead to the talking fridge, many companies have embarked on this promising market sector. Some big names in Silicon Valley like Apple, Google or Amazon have each filed patents to improve the quality of life of their users by connecting their homes. And it’s not only an american initiative, some french companies also tried to win some market share, like Ween, which developp a central server to improve the security of the house or La Poste, which is developping a smart fridge. This examples to say that all this companies invested in research and development to get a competitive advantage over other companies. What would happen if all this companies worked together to reach this goal ? They would probably build an entire house absolutly autonomous in several months. But the market being what it is, they all have interest to work alone to be the only one to get this competitive advantage. In my mind, that’s a good example of what a patent race can take away from consumers who would benefit from an autonomous house build faster. Now the question is how to fix that problem, how to give consumers what they want (like an autonomous house) without depriving companies of the profits they can make on that subject ? Because of course, if the profits are not high enough, no companies will invest in R&D. Show less Reply Paul Belleflamme 18 March 2018 Good example! Don’t forget to mention the references on which you based your comment. yassin 10 March 2017 The patent induced innovation by several ways. first of all patent is a protection for corporate innovation, because he gives a protection against other corporation who want to enter in the market. Especially against small businesses that do not have enough resources. Thanks to this protection, the company keeps a lead on its competitors and can invest even more thanks to the profit…Read moreThe patent induced innovation by several ways. first of all patent is a protection for corporate innovation, because he gives a protection against other corporation who want to enter in the market. Especially against small businesses that do not have enough resources. Thanks to this protection, the company keeps a lead on its competitors and can invest even more thanks to the profit that it will have generated, which will be due to its innovation. It generates income either by marketing its innovation or through licenses. It shows the potential for development of the company. The race for the patent is the result of investment in research and development. The patent approves the competitive advance of one company over the others. The companies that can compete with the company in a monopoly position are the big companies. They can invest to catch up. Thus, it can be seen that patents induce an investment in R & D. The benefits and costs associated with patent protection must be assessed. Inventions require considerable effort and investment in research and development The disadvantages: the patent must be published so that people do not copy it. Disclosure of product information may allow competing firms to obtain near substitutes and take market share to the innovator. When the patent expires the competitor may use the invention. The patent cost is between 3500 and 5000 euros. That’s why there are patent races between companies. With regard to innovation, it is important to distinguish between two kinds of patent races: 1) standard races, in which the winning firm obtains the patent and the other firm loses its R&D expenditures, and 2) asymmetrical races, where an incumbent firm tries to prevent a rival from filing a patent first and thereby avoid competition. In an asymmetrical race, the incumbent firm is only concerned with maintaining its monopoly rather than improving its innovative performance We can talk about the patent war between apple and samsung. Between these two giants there is a race for the patent, each one tries to file a patent on an innovation as quickly as possible and therefore invests enormously in research and development. Samsung multiplies patent filings in order to protect itself in the event of a lawsuit. In 2013 and 2014, it became the first patent applicant in Europe. In 2015, he was relegated to second place, beaten by Philips. Most technological groups are engaged in similar judicial wars, so they tend to increase patent applications in all areas of the world. By filing the patent first, license rights can be claimed from those who use the patent. We can cite the following example : Apple and Samsung race to patent flexible smartphones. Apple was the first to file patents concerning the flexibility of a telephone, but it was not finished, samsung took the opportunity to improve the concept and to anticipate apple by proposing a better prototype. We can also cite the case of sony and oculus. Sony tries to compete with oculus by developing a ps game helmet and a magic glove and has thus filed patents for his smart helmet while the company oculus has to present “the oculus touch, which is a new game display system En conclusion nous pouvons dire que la course au brevet induit une concurrence forte, et montre la stabilité ainsi que l’avance qu’a une entreprise sur les autres. La course au brevet a un fort impact sur l’innovation mais elle induit aussi beaucoup de conflits. il serait peut etre preferable de revoir les conditions d’un brevets. http://www.terrafemina.com/culture/culture-web/articles/5145-brevet-apple-seul-fabricant-autorise-a-commercialiser-des-ecrans-tactiles-.html https://www.innovationpolicyplatform.org/content/patent-races https://sqwabb.wordpress.com/2016/11/23/apple-and-samsung-race-to-patent-flexible-smartphones/ http://www.patentlyapple.com/patently-apple/2016/02/sony-patent-shows-theyre-in-a-race-to-deliver-a-ps-gaming-headset-magic-glove-to-compete-with-oculus.html Show less Reply Allen 10 March 2017 While looking for a face cream for my acne-prone skin at Sephora and at the pharmacy the other day, I realized something : many skin care brands claim to have a "patented, revolutionary formula". Some skin care brands even claim to have multiple patents in one product (L'Occitane for instance). I was really intrigued, especially after seeing the price …Read moreWhile looking for a face cream for my acne-prone skin at Sephora and at the pharmacy the other day, I realized something : many skin care brands claim to have a “patented, revolutionary formula”. Some skin care brands even claim to have multiple patents in one product (L’Occitane for instance). I was really intrigued, especially after seeing the price tags on those skin care products. After reading this article I tried to take a closer look to patents in the skin care industry, and I realized that it closely resembles a patent race. Also I realized that brands that claimed to have patented formulas were much more expensive that those who don’t have that claim. But what was the most fascinating to me is that anti-aging creams where the ones with the most patent claims. Probably because more mature women are more willing to spend a lot of money on a cream to prevent or slow down the skin aging process. For instance, the very luxurious and expensive skin care brand La Mer infuses most of its product with their “Miracle Broth” which claims to be a miraculous element that prevents/stops the aging process of the skin. “The specific ingredients of La Mer’s Miracle Broth™ are patented, and its formulation has not been disclosed; in fact, even the manufacturer states that they are not sure how Creme de la Mer actually works.” This miraculous element probably justifies La Mer’s very high prices (about 530$ for a jar of La Crème de La Mer, their most notorious product). I was curious to see how many skin care product had the word “patented” in their description, so I went on Sephora US’ website and typed “patented” in the search bar. Out of the 290 results that showed up, 167 of them where skin care, and most of those patented skin care products had anti-aging, anti-wrinkle, lifting, replenishing, rejuvenating and firming claims. I think it’s easy to identify a market niche right there : active, working women that have reached a mature age are looking for the most effective face or eye cream/serum that can stop the aging process no matter the price tag. And when it comes to skin care, patents are really reassuring and draw the distinction between a brand and another. For the same price range, we would be more attracted to the cream with patented ingredients or formula because they mean research, which also means effectiveness. Clearly, high end skin care brands have seized the opportunity and are in a patent race with each other, constantly looking for the next greatest anti-aging ingredient or formula on which they can put a patent on to distinguish themselves from the competition. Sources: http://www.dailymail.co.uk/femail/beauty/article-1242978/Cr-la-Mer–It-costs-530-pot–ingredients-cost-just-25–brow-furrowing-truth-stars-favourite-wrinkle-cream.html http://www.sephora.com/search/search.jsp?keyword=patented&mode=all Show less Reply Paul Belleflamme 13 March 2017 Nice research! Loann Millet 13 February 2017 Firms compete to be the first to come up with an innovation and obtain a patent, which will give it a monopoly. This way, the winning firm can get back their R&D costs and have benefits from its situation. Companies will increase intensity of their R&D costs to be the first one and patent the innovation. According to Loury : « Increased…Read moreFirms compete to be the first to come up with an innovation and obtain a patent, which will give it a monopoly. This way, the winning firm can get back their R&D costs and have benefits from its situation. Companies will increase intensity of their R&D costs to be the first one and patent the innovation. According to Loury : « Increased investment leads to quicker innovation » The expansion of the R&D intensity allows firms to finally get done with innovation faster. In a monopoly, costs are very high. There is an inefficiency. The race makes the costs lower, it will lead to an increase of innovation and gives a higher consumer surplus. We can say that patent races encourage innovation. Indeed, the final prize motivates competitors to raise their researches in order to win it. Competitors are interested in this prize so they will put the maximum effort on this race and everybody will try to get into this race. This will lead to a stimulated innovation. As long as the expected prize for innovators is high, more innovators join the race. A length of race is determined by the stage of innovation in which the innovation will be rewarded. It’s also called the minimal effort necessary to get patented. Short and long race terms are meant to describe if a patent is awarded at a low or high innovation stage. A long race demands a high minimal effort necessary, so the firms will compete till almost the end of stages, that is to say the patent. It will lead to a quicker innovation but also to wasteful investments. Indeed, long patent races have a possibility of generating wasteful efforts. Indeed, a lots of competitors invest resources to reach the same prize but only one will be rewarded. It means that all the efforts made by competitors will be useless. A short race, means that the idea will be rewarded in an early stage, so the firms won’t be encouraged to finish the good, he has no competitor anymore. If two firms have heterogeneous costs, the inefficient firm finds the (long) race too expensive. Patent races make it less likely for an inefficient firm to win. Races are used to filtrate inferior innovator. In a case where two firms have homogenous costs, a (long) race will allow to reduce the deadweight loss. Indeed, it means that firms have identical technologies, so a race between them will avoid a waste of ressources. A longer race is preferred when firms are homogenous. In a short race, the chance of a firm with high R&D costs winning patent is higher than in a long race. In conclusion, patent races are essential parts in R&D but they don’t represent the whole process because firms have to add some extra costs and time after winning the race to come up with the final product. The choice between short and long races, large or narrow prizes are very decisive. The patent race benefits two goals. It motivates the firms to invest in R&D and complete the innovation process quickly but in some cases patent races can end with a waste of efforts. Furthermore, patent races are common, with large firms being more like to race. We can find them more frequently in field where patents are weaker (computers…). Also, there is a link between losing a race and abandoning the innovation. References : 1-http://www.business.uzh.ch/dam/jcr:ffffffff-d78f-74f8-ffff-ffffa20189aa/OptimalRulesforPatentRaces.pdf 2- http://ksmb55b.kellogg.northwestern.edu/research/math/papers/1343.pdf 3- http://repository.cmu.edu/cgi/viewcontent.cgi?article=1552&context=tepper 4- http://www.kellogg.northwestern.edu/faculty/schmedders/htm/CMSEMS%201343.pdf 5- http://druid8.sit.aau.dk/acc_papers/0gek8c2qgbq3q6ncgsr77f6mu8gs.pdf 6- http://economics.yale.edu/sites/default/files/files/Workshops-Seminars/Macroeconomics/zeira-030304.pdf Show less Reply Hiben Kevin 14 October 2016 I would like to relate this topic about the patent race with the consequences of the inequalities between north and south. Besides the fact that this innovation is good in regard to technological advances, this race brings in my opinion inexorably to a run for the money. Innovation isn’t it also, and primarily, to improve our lives and meet increasing…Read moreI would like to relate this topic about the patent race with the consequences of the inequalities between north and south. Besides the fact that this innovation is good in regard to technological advances, this race brings in my opinion inexorably to a run for the money. Innovation isn’t it also, and primarily, to improve our lives and meet increasing human needs? My example would be the patent war on medical advances around AIDS. The north, with significantly more resources in R & D, doesn’t it serve of these benefits in order to use the Southern Poverty? Many complaints were filed against Brazil and South Africa in the 90s by the US Government or the biggest pharmaceutical firms. These were pursuing both countries, where the proportion of AIDS victims is highly larger than here, for development of generic drugs for free distribution or simply because they are fighting in various ways against the high prices of pharmaceutical lobbies. The arguments of these lobbies are the fact that they charge high prices to offset the costs of R & D. But these groups seem to spend the same amounts on marketing. I cite this example to demonstrate that the patent race is not especially winning for everyone while innovation appears to be at first sight. The basic inequalities between the different parts of the globe attest well to what I would call rather a “money race.” All these general regulations around patents prevent a part of the population to access these technological advances which should benefit to everyone. These patent races also prevent to the slower developing countries to have time to develop themselves without having to depend on the north. These inequalities persist especially between northern bigger pharmaceutical companies or lobby’s and southern local laboratories which don’t have the same financial resources and which are often “out of the race”. http://ecorev.org/spip.php?article306 Show less Reply Surabhi Kothiyal 12 October 2016 As mentioned in the article, patent races can lead to wasteful investments and duplication of effort. Fields that are characterized by scientists and researchers perceiving the same opportunities and relatively limited pool of knowledge have more races of patenting their findings. Strong patent laws and intellectual property rights for the early stages of development can therefore, lead to more duplicative…Read moreAs mentioned in the article, patent races can lead to wasteful investments and duplication of effort. Fields that are characterized by scientists and researchers perceiving the same opportunities and relatively limited pool of knowledge have more races of patenting their findings. Strong patent laws and intellectual property rights for the early stages of development can therefore, lead to more duplicative and redundant research to capture the patent before the competitors. Patent races can have mixed effects. Patent races can help speed up the process of innovation, for example, competition between private and public sectors to sequence human genome accelerated the process of innovation, effectively reducing the time of completion of the project, which was earlier expected to take significantly longer. However, patent races in the bio-medical field, for example, patenting gene fragments, illustrates how multiple independent discoveries can result in long backlogs in patent applications and confusion regarding who owns what. A number of patent applications were brought in the 1990s for thousands of genes by patenting DNA fragments to reconstruct whole gene sequences. These applications, while perhaps not legally tenable, were thought to have the effect of clouding the legal picture for years by creating a priority date for the discovery of genes hence making it difficult for later researchers to claim a novel discovery. In order to counter the negative effects of duplicate research, collaboration has been recommended for better R&D productivity. In the pharmaceutical industry, and specifically in oncology, Bain & Co. sees three benefits that companies would get 1. Earlier funding of projects, and selection of projects most likely to succeed 2. Reduce duplication 3. Distribute risk and returns across partners, increasing the predictability of pipelines and long-term revenues Collaborations can reduce duplication. In a quite a few disease categories, many pharma companies have focused on the same opportunities due to a large number of patients and the scope of grab market share by marketing aggressively. As overlap increased, the model proved to have many shortcomings. Companies continued to invest highly despite the probability of success declining, duplicate investments increased and players started crowding a narrow market space. Hence, the productivity of innovation declined as product differentiation declined and marketing costs increased. There was also a loss of opportunity as people are likely to pay more for products that are clearly differentiated. Oncology is likely to the latest area for these trends to show up. Although the number of patients is lesser there are opportunities due to the following reasons: high prices for oncology drugs, patients willing to pay the high prices and growing potential of new drugs. The drug pipeline for oncology is jammed with overlapping products in clinical and pre-clinical trial phase, two to three times as many as the next area of research. There will be a limited number of winners despite huge investments with no way to justify the duplication of R&D effort. At that point, only products with differentiated clinical efficacy are likely to survive in the market. These will command a premium price and market share while most of the others will struggle to even get a return on their investment. Hence, oncology is likely to suffer the same fate as primary healthcare: low returns on investment, a crowded and competitive market and high marketing and sales costs. Although, changing the nature of the industry is an extremely tough task, the approach of pooling of resources could create value for the industry. The patent system, even though extremely important, is inefficient in terms of providing enough incentives to undertake desirable research and development. The incentive should be related to the size and scope of the patent right, also reflecting the R&D cost of the project. Hence each patent should be tailored for the particular innovation. In addition to the cost of R&D, the patent should also reflect the market conditions for the particular industry and of the particular product or process. Although it is extremely hard to incorporate all of these conditions in the patent system, this shows that the patent system needs continued improvement by analyzing the complex economic implications. Further, for maximising social welfare, patent and competition rules must be in harmony. For example, the patent system rules should be framed to foster innovation but at the same time respect fair market rules. Therefore, patents are given only for ideas that benefit society and prevent the patenting of things not beneficial to society. Such measures include the fact that patents are given only for inventions and not discoveries, patent duration etc. Competition policies in the context of patents become important when patents are used to abuse market power conferred. Such a situation can arise when an exclusive license excludes other firms etc. Competition policy must ensure that distortions such as these are minimised. References: Long C, Patents and Cumulative Innovation, Washington University Journal of Law & Policy, January 2000 Langinier C and Moschini G, The Economics of Patents: An Overview, Working paper for Center for Agricultural and Rural Development Iowa State University, February 2002 http://www.bain.com/publications/articles/collaborating-for-better-research-and-development-productivity.aspx http://www.wipo.int/patent-law/en/developments/competition.html http://scholarship.law.marquette.edu/nies_lectures/11/ Show less Reply Priya Jindal 12 October 2016 A patent race is a competition between inventors, to innovate a new product first, before its competitors, and get it protected via a patent, so that it can secure a competitive advantage in the market. In the following comment, I will talk about the patent race in the pharmaceutical industry in India. The case of India is unique, because an average…Read moreA patent race is a competition between inventors, to innovate a new product first, before its competitors, and get it protected via a patent, so that it can secure a competitive advantage in the market. In the following comment, I will talk about the patent race in the pharmaceutical industry in India. The case of India is unique, because an average Indian cannot afford brand-name drugs. Due to this, the government here allows the pharma companies in India to “reverse engineer” the drugs, to create their own version of these drugs or generics. This has led to many cases of fights between the firms to sell the drugs in the Indian markets. Example of this was when Natco Pharma was allowed to sell a copy of Nexavar, a cancer drug at 10% of its price, originally developed by German pharma company called Bayer. Similarly, Cipla was allowed to sell its own version of a lung cancer drug made by Roche for 33% of its price. Novartis has sued the Indian government on multiple occasions for allowing the sales of generics, but the government only asked Novartis to lower its drug prices (Gleevec) in return. Indian pharma company Glenmark got into disputes with a number of multinational drug manufacturers. This includes conflict over the copy of the anti-diabetes drug created by Merck and an arthritis drug originally created by Abbott Biotechnology. This regulation in the country has a two-pronged effect. It helps the average Indian get access to affordable drugs, thus leading to societal benefit. Indian pharma companies have become experts in process innovation, thus leading to lower costs. These process innovations can be adopted worldwide so that the benefits can reach a wider population. However, the other side of this regulation is that it dis-incentivizes product innovation. Indian firms are not motivated to innovate new drugs. because they avoid duplication of the effort. This regulation is also a deterrent for multinational companies to introduce the drugs in India. This affects the accessibility for these drugs for Indian patients. Thus, this case shows how patents and protection of IP is important to incentivize innovation. The multinational drug companies choose to sell only in those markets, where they have patent protection, allowing them to sell at higher prices and cover the R&D cost invested in the drug. This proposition of higher profits is what motivates firms to spend time and money on innovating new drugs, but it makes these drugs inaccessible to an average person. Sources: http://www.fiercepharma.com/legal/merck-scores-victory-india-patent-battle-over-top-diabetes-meds http://www.financialexpress.com/industry/companies/glenmark-pharma-wins-patent-war-with-abbott/26821/ http://blogs.plos.org/workinprogress/2012/09/12/the-battle-over-generic-drugs-in-india-and-elsewhere/ http://www.reuters.com/article/us-india-medicine-patents-idUSKCN0X918Z Show less Reply Emilie Vanderseypen 12 October 2016 In this comment, I will try to find some examples to illustrate what is said in this article. An example is Airbus and his Chinese competitor, Comac (Commercial Aircraft Corporation of China). They have started a race to optimize the time-of-flight. When the plane is not flying, it is so costly that it is very important to minimize this time…Read moreIn this comment, I will try to find some examples to illustrate what is said in this article. An example is Airbus and his Chinese competitor, Comac (Commercial Aircraft Corporation of China). They have started a race to optimize the time-of-flight. When the plane is not flying, it is so costly that it is very important to minimize this time on the ground. On 24 november of 2015, the USA validated the patent of Airbus. This company is accelerating the patent rate, with 21 patents only in december. This is a consequence of anticipating the growing power of China. Indeed, they have designated the C919 in order to compete Boeing and Airbus on the Chinese market. In this example, we can see that Airbus has chosen a strategy of innovation, investing a lot in R&D to rule out the competitors. According to this article, patenting, innovating and invent the plane of tomorrow is the only way to stay in the ranking. (Perruchot, J., 2016) According to the OCDE (Organisation de Coopération et de Développement Economiques), there are too much patents because of a huge willingness to decrease the competition among firms. The offices in charge of patents are swamped which leads to a slowdown in the placement of products on the market. This leads to a reduction in terms of patents’ quality. (OCDE, 2011) It does not encourage innovation, neither the share of knowledge. In McKenna’s article, it is also said that while the USA stay the leader in R&D, China is a growing rival which scares the USA. It can be linked with Airbus company, reacting to Chinese technical progress. Sources : 1. Perruchot, J. (2016). La course aux brevets d’Airbus : une stratégie gagnante de l’innovation. Online http://www.latribune.fr/opinions/tribunes/la-course-aux-brevets-d-airbus-la-strategie-gagnante-de-l-innovation-542306.html 2. OCDE (2011). Science et technologie : la baisse de qualité des brevets entrave l’innovation, constate l’OCDE. Online http://www.oecd.org/fr/presse/scienceettechnologielabaissedequalitedesbrevetsentravelinnovationconstatelocde.htm 3. McKenna, A. (2011). La course aux brevets tue l’innovation, dit l’OCDE. Online http://techno.lapresse.ca/nouvelles/201109/20/01-4449485-la-course-aux-brevets-tue-linnovation-dit-locde.php Show less Reply Giada G. 12 October 2016 Nowadays, patent races are an undeniable sign of a developing economy, where being competitive is a vital need of every single firm. In a patent race, in fact, two or more inventors compete (usually by increasing their research expenditures) to discover an invention for the prize of obtaining the patent. This can lead to patents that are neither used nor licensed…Read moreNowadays, patent races are an undeniable sign of a developing economy, where being competitive is a vital need of every single firm. In a patent race, in fact, two or more inventors compete (usually by increasing their research expenditures) to discover an invention for the prize of obtaining the patent. This can lead to patents that are neither used nor licensed to others, and also to wasteful investments and duplication of research efforts. In this context it is important to also consider that bigger firms, such as Apple in the smartphone industry, dispose of a larger amount of resources, which allow the company to fasten the research process and, then, to precede the competitors in this race. As a consequence, the competitive situation of the new emerging companies is deeply affected. Furthermore, patent race may also influence the quality of the inventions itself, due to the fact that firms have to hurry up in order to be the first and to obtain the patent. However, the competitive element of patent races can be positive in speeding up innovation processes. Moreover, parallel researches may lead to different results or to the quicker identification of solutions. In conclusion, competition and innovation are deeply related to each other and the absence of one of them could incredibly affect the achievement of progress in almost every field of the daily life. Anyway, increasing the regulation in the patent system and promoting cooperation among competitors could help to optimize the innovation process and to limit the potential negative effects generated by races. https://www.innovationpolicyplatform.org/content/patent-races Show less Reply Anne-Sophie Ries 12 October 2016 When we talk about patent race, some questions spring to mind. Here, i'll not give a comment with sources or be very theoretical. Rather, i'll expose my opinion and some of my worries. I'm sure that protecting our innovations is a good thing ; people work hard to find something new, to create something good. But i wonder if this…Read moreWhen we talk about patent race, some questions spring to mind. Here, i’ll not give a comment with sources or be very theoretical. Rather, i’ll expose my opinion and some of my worries. I’m sure that protecting our innovations is a good thing ; people work hard to find something new, to create something good. But i wonder if this practice will not put some small firms in a tough situation. In classe, we see the difference between incentive and capacity, but we don’t talk about the discouragement of the small firms. I think it’s a important point to take into account. However, i had the opportunity to talk with one of my friends who studies bio-engineering. We discussed the issues surrounding the plant breeding sector. He noted that in this particular case, the primer statement is contradicted. When considering this industry, it’s the small firms who gain from the patent competition. The bigger firms “lose their time” working against each other’s interests while small firms gain all the credit discovering the meaningful varieties. Indeed, most patent applications of the larger companies have the sole purpose of freezing the selection paths of the rival bigger firms, letting the smaller ones progress in their research and achieve their goals. I therefore agree with the article : some sectors should have their own pattern policies, as to avoid wasting money and time. Show less Reply Claudia Bruffaerts 12 October 2016 When it comes to Innovation, it’s always about who will be the first to launch a new invention, or who will invest the most in R&D. This is why we refer to it as a patent race. Every sportsmen would agree with Dr. Cobanli’s quote : “Competitors push you to achieve more”. This last decade, there have never been…Read moreWhen it comes to Innovation, it’s always about who will be the first to launch a new invention, or who will invest the most in R&D. This is why we refer to it as a patent race. Every sportsmen would agree with Dr. Cobanli’s quote : “Competitors push you to achieve more”. This last decade, there have never been so many patents filed and so many different technologies on the market. In a way, the race for patents benefits to us consumers: a wider range of choice and a variety of technologies available. It also speeds up innovation processes and let firms identify quicker solutions to meet their objectives and target their customers. However, this patent race can lead to patents that are neither used nor licensed to others and also to wasteful investments and duplication of research efforts. Probably the most recent example of this is the unfortunate failure of Samsung’s Galaxy Note 7. In order to compete with the iPhone7 and to weaken the sales figure of this release, Samsung wanted to launch a better smartphone with an iris captor and a bigger battery. Managers put intense pressure on every department, including R&D to launch their product before Apple’s. Apparently a little bit too soon – Owners of the Galaxy Note7 smartphone started to notice it smoking and burning. Too much ambition and precipitation has led to one of the biggest recalls in the history of mobile phones. Last year, the South Korean firm also had to pay 119,6 million dollars to Apple for using Apple’s patented system : the unlocking button on the touchscreen and the of auto-correction function. This shows how much a company can loose a lot in the race for innovation, in terms of money and in terms of image. As Peter Drucker said “ The race for quality has no finish line – so technically, it’s more like a death march.” Sources: – https://www.innovationpolicyplatform.org/content/patent-races – http://www.theverge.com/2016/10/5/13175000/samsung-galaxy-note-7-fire-replacement-plane-battery-southwest – http://www.numerama.com/tech/195371-quand-samsung-veut-a-tout-prix-depasser-apple-le-galaxy-note-7-explose.html – http://www.developpez.com/actu/105022/Guerre-des-brevets-Apple-renverse-la-precedente-decision-de-justice-en-faveur-de-Samsung-qui-doit-a-nouveau-lui-payer-120-millions-de-dollars/ Show less Reply Vandan Jain 12 October 2016 The sole purpose of any company is to create wealth for its shareholders. If it is not able to show increase in profits at the end of every accounting year, then the shareholders do not pump in more money. There is only one way to constantly generate profits i.e. to keep on innovating. While it is true that the bigger…Read moreThe sole purpose of any company is to create wealth for its shareholders. If it is not able to show increase in profits at the end of every accounting year, then the shareholders do not pump in more money. There is only one way to constantly generate profits i.e. to keep on innovating. While it is true that the bigger the company gets, its capacity to innovate increases and its intention to innovate decreases since it has got a lot to lose. However, over the last few years, a new trend has emerged with more internet penetration and through easy information access. If a company is not innovating on a regular basis, then it is deemed to become redundant after a certain point of time. Take for example the case of Nokia, Yahoo and Canon. They used to be the kingpins in their sector. Now, all of them have almost doomed into oblivion. The speed of innovation off late has become so rapid that we can see a new breakthrough technology coming up every moment or the other. The time for a patent should obviously be industry specific so that it fuels the creative spirit of the companies and make existing processes and products better. It should not discourage a company to innovate. Rather, it should promote more competitive spirit among the companies to fight for the top slot. Sources: http://www.ipdigit.eu/2014/11/patent-races-pros-and-cons-2/ http://www.ipdigit.eu/2010/09/what-is-the-link-between-competition-and-innovation/ Show less Reply Benjamin Croix 12 October 2016 The patent race can be considerd as a "Rat-race problem" (Hindriks & Myles, 2004). The 2 players, in order to win the all profit, are forced by each other to invest a still greater amount at each period. At the end, we can consider this as a waste for the loosing firm. Knowing that if they agreed not to invest,…Read moreThe patent race can be considerd as a “Rat-race problem” (Hindriks & Myles, 2004). The 2 players, in order to win the all profit, are forced by each other to invest a still greater amount at each period. At the end, we can consider this as a waste for the loosing firm. Knowing that if they agreed not to invest, the outcome would have been the same. But will it really be the same ? The problem with this simplified theorem, is that we don’t consider the finished product. Would have it been such as good if the firms haven’t invested a lot ? Innovation has an indirect effect which is the opening of new doors for futur innovations. New process leads to a new product which can also lead to another new process. We can observe a ‘domino effect’. The more you innovate now, the more you will be able to innovate tomorrow. The exponential growth in techological advance confirm this theory. Now considering the ‘present bias’ (O’Donoghue & Rabin ; 1999), we know that people prefer getting their payoffs at the earliest period possible. If the patent race encourages firms to invest more and quicker, the earlier they will innovate and thus the more utility people will get from this innovation. Adding the assumption that today’s innovation accelarate tomorrow’s innovation, we have even more incentives to innovate early. With those two new ideas in mind, we can now put this in a broader perspective. The direct loss of the losing-firm could be counter-balanced with the future gains created by the earlier release of the patent. The fiercer competition of this patent race will also accelerate the effect of ‘natural selection’ in the market. The non-innovative firms will quit quicker, leaving the place for more innovative and ambitious firms. The outcome of the patent race is still shady, it will still depend on the market structure and the competition of the market. Despite, we can now assume that, in some cases, the patent race could have a beneficial effect for society. We just need a broader vision. One question is relevant to ask. Is the quicker innovation going to create a quicker obsolescence of products, encouraging a more fierce consumption and thus create a new externality of overconsumption ? Maybe should we aim for a more durable way to innovate. Jean Hindriks and Gareth D. Myles (2004). Intermediate Public Economics O’Donoghue, T., & Rabin, M. (1999). Doing it now or later. American Economic Review, 89(1), 103-124. Show less Reply Anant Jindal 12 October 2016 Patent race, as we already have established, refers to being the first to come up with a new product (/process) and hence securing market dominance. I’ll be focusing on technological sector, specifically smartphone industry. I have worked in the same industry for a some time, and in the process, I was lucky enough to be able to file two…Read morePatent race, as we already have established, refers to being the first to come up with a new product (/process) and hence securing market dominance. I’ll be focusing on technological sector, specifically smartphone industry. I have worked in the same industry for a some time, and in the process, I was lucky enough to be able to file two patents for new process. I have also worked with a few people who were able to get a few patents, So I believe I can throw some light on how the internal system of filing more patents work. in the article, we established that it is for achieving market dominance. I want to put forward another point i.e. they are doing it to protecting themselves from high cost lawsuits and increasing net worth of the company along with market dominance. A few years ago, google bought Motorola. they bought it for $12.5 billion and then sold everything except the patents. Google paid between $2.5 to $3.5 billions for Motorola patents. and it was their plan all along i.e. to acquire patents. Google might have done it to protect itself and at the same time, to give credible threat to other companies (including the partner companies like samsung). and same is being done by other companies in racing to file more and more patent faster. Since last 10 years, samsung has been constantly at number 2 in filing patents (first is IBM). although when you go deeper into what kind of patents are these and the possible utility in near future, most of the patent aren’t that useful in term of being integrated in products, or even if they are, most are never implemented. We all have read news about the smartphone wars, i.e. lawsuits between major smartphone companies claiming infringements of patents. and as the results go, there is no universal consensus. i.e. same lawsuit is won in a country and lost in another. so it becomes all the more important for companies to have more and more patents to build a case. That’s where the industry seems to be moving. During my work, we were heavily encouraged to submit ideas for patents, and those ideas were not for achieving one particular goal, rather, it seemed, that they just want the sheer number of patents. which increases worth of the company and at the same time, it increases chances in a legal war. If a good idea comes along in process which distinguishes our product, that’s cherry on the top. in the end, I’ll just try to summarise the whole thing by reiterating, that patent races are more than just for market dominance. it is for keeping others in line. it is about being able to stand legal battles. it is to inflate net worth of the company. and some times, it’s for being able to stop other companies from making something rather than making a product yourself. End result might be to maximise the profit (or value to shareholders) but the paths varying hugely. http://bgr.com/2014/02/13/google-motorola-sale-interview-lenovo/ http://fortune.com/2014/02/12/a-peek-at-googles-ma-ambitions/ https://gigaom.com/2014/01/30/google-paid-4b-for-patents-why-the-motorola-deal-worked-out-just-fine/ http://www.forbes.com/sites/gordonkelly/2014/02/10/how-google-used-motorola-to-smack-down-samsung-twice/#25a7b75b53ab https://en.wikipedia.org/wiki/List_of_top_United_States_patent_recipients Show less Reply Akshat Prakash Verma 12 October 2016 Patent races were designed to protect as well as stimulate innovations. And to the end that objective is concerned, they do a perfectly good job. Companies invest a lot of resources in R&D and with no protection, it will not be possible for them to recover their investments and at the end of the day, a firm is an economic…Read morePatent races were designed to protect as well as stimulate innovations. And to the end that objective is concerned, they do a perfectly good job. Companies invest a lot of resources in R&D and with no protection, it will not be possible for them to recover their investments and at the end of the day, a firm is an economic agent that is out there to make money. And being the first one to innovate and file a patent grants them with that opportunity. But I would like to argue that patent races don’t kill off competition and it is certainly not a “winner takes all” situation in many cases. In industries where intellectual property is the main driver of market share, there exist ample opportunities for firms to bring new products and create new market niches like the pharmaceutical industry or the technology industry. Here I’d like to draw on my own experience of working in the Multiple Sclerosis market in the US & Europe. There are 4 companies who produce drugs for MS and no one clearly dominates the market. The reason for that is that there are so many opportunities present to innovate – like the drug dosage, mode of administration (oral or injection), mode of action (pegylation or no pegylation) etc. And by varying the above factors, the companies keep coming out with new, improved drugs, which benefits the patients. Each drug caters to a market niche – there are patients with severe/mild MS, patients with high relapse rates/low relapse rates, patients who prefer oral/injectable drugs etc. Patent races, in fact, also promote collaboration. We’ll again take the example of pharmaceutical industry, where these days, the trend is to have smaller companies invest resources in R&D and innovate and the larger firms will conduct clinical trials and market the drug. In economic terms, both the firms are now better off and it takes both to a higher level of utility, thus creating a Pareto Optimal situation, which is good. But, patent races do have their disadvantages. The first is that the firms may not take care of the consumer’s interest, which is evident in the sky-high drug prices in the US, because their they can extract high rewards through their market power. But, this can easily be taken care of by strengthening Intellectual Property laws or putting a price ceiling. Take for example India, which is a country that doesn’t have a state provided insurance for its citizens. So, their laws prohibit the drug companies to price their drugs at their desired level. Also, it is not easy to get a new patent granted with only minimal changes in already patented drugs, something that was seen when Novartis failed to get a new patent for its cancer drug, Glivec. As a result of such restrictions, the drugs are within the reach of most of the citizens. So, in my opinion, patent races do have their pros and cons, but from where I stand, there are more pros than cons and in the long run, patent races help in improving the well being of society as a whole. References:  http://www.theglobeandmail.com/report-on-business/small-business/sb-money/big-pharma-turns-to-smaller-firms-for-innovation/article12751137/ http://www.wsj.com/articles/SB10001424127887323296504578395672582230106  https://www.parexel.com/parexel-insights/innovation-pharmaceutical-industry-change-toward-personalized-medicine  https://www.innovationpolicyplatform.org/content/patent-races  http://dspace.mit.edu/bitstream/handle/1721.1/2522/SWP-3710-31904694.pdf?sequence=1&origin=publication_detail Show less Reply Sparenberg Antoine 12 October 2016 Patent races and patent authorities Innovation can be stimulated in two different ways: offering a big incentive to a single innovator or offering a small incentive to several players and let them race out of fear that a competitor would get the prize (Kenneth et al., 2012). As mentioned in Patent Races: pros and cons (Belleflamme, 2014), patent races can have…Read morePatent races and patent authorities Innovation can be stimulated in two different ways: offering a big incentive to a single innovator or offering a small incentive to several players and let them race out of fear that a competitor would get the prize (Kenneth et al., 2012). As mentioned in Patent Races: pros and cons (Belleflamme, 2014), patent races can have ambiguous results. Indeed, although increasing investments in R&D and accelerating innovation, races imply a wasteful duplication of resources and efforts. This leads to a loss of social welfare. According to the above-mentioned article, the trade-off between those two antagonistic forces largely depends on the “innovative environment in which the firms operate”. However, let’s not forget that the effects of patent races can also be moderated by patent regulations. According to Kenneth et al, patent authorities can legislate on two dimensions: At first, it might determine at which stage of the innovation (idea, design, prototype, marketable product) the patent must be granted and the race ended. If the exclusivity of the innovation is granted earlier in the process, competitors will be out of the contest sooner and cut short their expenses. This ensures that most of the effort will be borne by the leading firm and wasteful duplication will be limited. Yet, an early patent granting makes it difficult to filter out less efficient companies and runs the risk of granting the patent to a player not strong enough to develop the innovation. Secondly, patent authorities decide the term (duration) of a patent. Shorter patents mean that less players will be willing to race (hence, less duplication of resources) and that the resulting monopoly will last shorter which increases consumer surplus. On the other side, shorter patents decrease the incentive to innovate. Moreover, patent races can sometimes lead to tricky and absurd situations constraining patent authorities to step in and take actions. This happened with the U.S. aircraft industry when dozens of competing companies (including the Wright brothers) held patents on the different components allowing to build planes. Because those firms where reluctant to collaborate, Congress had to create a “patent pool” putting all the aircraft patents under control of a third party in order to enable planes production (Surowiecki, 2008). In conclusion, patent races must be carefully managed by authorities in order to avoid incongruity and maximize social welfare. Sources and readings: L.Judd, K., Schmedders, K. & Yeltekin, S. (2012). Optimal rules for patent races. in International economic review, 53(1), 23-46. Thompson, N-C. & Khun, J-M. (2016). Does winning a patent race lead to more follow-on innovation ?. Surowiecki, J. (2008). The permission problem. Online. http://www.newyorker.com/magazine/2008/08/11/the-permission-problem Heller, M. The wealth of the commons. Online. http://wealthofthecommons.org/essay/tragedy-anticommons Belleflamme, P. (2010). What is the link between competition and innovation ?. Online. http://www.ipdigit.eu/2010/09/what-is-the-link-between-competition-and-innovation/ Show less Reply Caroline Emaer 12 October 2016 A patent race is defined as « two (or more) firms pursuing the same goal; to this end, they choose how much R&D resources to invest in view of being the first to reach the objective and so, to file a patent so as to secure a dominant position in the market. » As we can read on « The Innovation Policy Platform », there are…Read moreA patent race is defined as « two (or more) firms pursuing the same goal; to this end, they choose how much R&D resources to invest in view of being the first to reach the objective and so, to file a patent so as to secure a dominant position in the market. » As we can read on « The Innovation Policy Platform », there are actually two kinds of patent races: the standard races and the asymmetrical races. – The standard races occur when « the winning firm obtains the patent and the other firm loses its R&D expenditures. » In the pharmaceutical sector, this is a good point. A company can exclude competitors for a certain time so that it is possible for it to recover its investments in research and development. In this case, the patent is really useful because it will rapidly offer innovation to consumers. It will therefore improve the social wellbeing. But we don’t have to neglect the sunk investments. – The asymmetrical races occur when « an incumbent firm tries to prevent a rival from filing a patent first and thereby avoid competition in order to maintain its monopoly. » A big and well-known example for this kind of patent race is the big battle between Apple and Samsung. These companies abuse of litigation to keep away the concurrency and use huge resources to defend themselves in the courts. This is a ‘lose-lose situation’ because they won’t improve their innovations by focusing on the competitors. On the contrary, companies should use other’s ideas for further innovation. Besides, in this sector, the patents may become ridiculous because the technology moves so fast that the patent could be accorded when the new technology is obsolete. Without saying that this kind of innovation doesn’t really improve the consumer welfare, it only benefits a certain percentage of the population. As a conclusion, the patent system exists to encourage innovation but we have to find an equilibrium between the benefits of quick innovation and the costs generated by this kind of races. It would be a good idea to reward companies that work together to find better and more efficient results. Sources: https://www.innovationpolicyplatform.org/content/patent-races http://wadhwa.com/2016/03/05/why-apples-defeat-to-samsung-was-a-victory-for-innovation/ http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf Show less Reply Blockerye Nicolas 12 October 2016 Patents were originally created to stimulate innovation. Actually, patent race can also have a negative effect on innovation. Indeed, this review explain well the two ambivalent effects of patent on innovation. Firstly, patent lead to more innovation because innovation protection stimulate companies to invest more in R&D to be the first offering a new product or process. This patent lead the…Read morePatents were originally created to stimulate innovation. Actually, patent race can also have a negative effect on innovation. Indeed, this review explain well the two ambivalent effects of patent on innovation. Firstly, patent lead to more innovation because innovation protection stimulate companies to invest more in R&D to be the first offering a new product or process. This patent lead the company as a monopoly. However, patent is assigned only to the first company who achieve his goal. That means that the efforts of others companies are wasted. Having this in mind, it is legitimate to ask us if patent race are good in a social welfare point of view. If we take the example of the patent race in the aeronautical sector, and in particular the case of Airbus and his new chinese rival Comac, we can see that the only dominant strategy is to patent the most patent as possible in order to be more innovative than the others. It is interesting to note that some of these patents will never be used industrially. It is a real race to patent the most innovation as possible before its rivals. These last years, competition in the aeronautical sector has become fiercer. This can be partly explain by the new Chinese entrant. While Airbus and Boeing still largely dominate the market, demand for airplanes to the Chinese domestic market is growing and is expected to reach more than 6,000 aircraft over the next 20 years. Comac (new entrant) could (if everything goes well) compete with the two leaders from 2019 with its medium-haul C919. Moreover, China has very innovative strategic partners to develop its engines. The company CFM International has been chosen by China to produce new engines who shows the ambition to be 10% more efficient than its rivals. Chinese research and development in the aeronautical sector illustrates the willingness of China to be among the main players in this still growing market. It’s obvious that innovation and patent race is the only way for these companies with high spending in R&D to remain profitable. However, would it not be more beneficial for consumers to put in place a technology collaboration on particular programs between these firms? Sources https://www.monde-diplomatique.fr/2012/08/BAKER/48031 http://www.latribune.fr/opinions/tribunes/la-course-aux-brevets-d-airbus-la-strategie-gagnante-de-l-innovation-542306.html https://www.innovationpolicyplatform.org/content/patent-races Show less Reply Claire Vanherf 12 October 2016 One recent example of firms engaged in patent race is Tesla and Google with their autonomous cars. Indeed, these firms are willing to come up with an autonomous self-driving car as soon as possible. Efforts in developing a driverless car have been increasing in the past few years. Nowadays, many cars manufacturers and other technology companies have entered the autonomous…Read moreOne recent example of firms engaged in patent race is Tesla and Google with their autonomous cars. Indeed, these firms are willing to come up with an autonomous self-driving car as soon as possible. Efforts in developing a driverless car have been increasing in the past few years. Nowadays, many cars manufacturers and other technology companies have entered the autonomous cars patent race. On the one hand, Google is investing huge amount of money in R&D since 2012 in order to develop prototype vehicles. According to the search engine company, this innovation will benefit society by reducing traffic incidents, allow for more independence and reduce the time spent in commuting. On the other hand, Tesla and other car manufacturers such as Volvo have started to invest in R&D as well aiming at developing a completely self-driven car before their main competitors will do so. Uber, the famous platform that match drivers and customers, has recently decided to join the race as well. As many firms tends to join the battle with the ambition to be the first one to produce a self-driving vehicle, the market for personal transports seems to be attractive from an innovator’s point of view. However, one can ask if this wasteful duplication of effort is relevant from the society’s point of view. Is it really justified that many firms spend huge amount of money on R&D expenditures while only one company will win the race with the only benefit being that these patent races increase the speed at which innovation occurs? References : http://www.techtimes.com/articles/168338/20160704/tesla-vs-google-both-in-the-self-driving-car-race-each-with-its-own-approach.htm http://www.ipwatchdog.com/2016/04/07/autonomous-cars-patents-perspectives/id=68045/ https://www.google.com/selfdrivingcar/ http://www.economist.com/news/business/21707600-battle-driverless-cars-revs-up-whos-self-driving-your-car http://www.economist.com/news/leaders/21706258-worlds-most-valuable-startup-leading-race-transform-future Show less Reply charlotte 12 October 2016 Patents can be used by the company to reward the time and money spent in the search and development. Patents support the development of new ideas. However, certain actors can be set aside because of patents. Indeed patents may represent a barrier to entry for new entrants. They must arrive on the market with a superior technology than that already…Read morePatents can be used by the company to reward the time and money spent in the search and development. Patents support the development of new ideas. However, certain actors can be set aside because of patents. Indeed patents may represent a barrier to entry for new entrants. They must arrive on the market with a superior technology than that already present on the market. This can be seen as a way to develop innovation to exceed competitors. But this can sometimes be difficult when the basic ideas cannot be used. Some companies use patents to evil. Some companies use them as a speculative support. From a consumer point of view, patents allow to have new innovative technologies on the market. But sometimes patents are forcing people to pay more. This is indeed the case for drugs for which patent refuses the existence of a generic. These pharmaceutical firms acquire a monopoly and so they are free to set prices as they wish. “Medecin sans frontiére” are in the battle for access for the poor to medicines. In the example of the patent race, we can take the example of Airbus. Airbus file patents in a logical of enhancement of innovation and surprise the spirits with his ambition. The group also accelerates innovation and patent filing a view to the rise of a Chinese competitor but also for the Boeing. Airbus offers patents in order to anticipate the rise of a rival in the aeronautics sector. sources: https://www.contrepoints.org/2014/08/08/176297-les-brevets-un-mal-necessaire http://www.latribune.fr/opinions/tribunes/la-course-aux-brevets-d-airbus-la-strategie-gagnante-de-l-innovation-542306.html http://www.monde-diplomatique.fr/2002/02/DEMENET/8408 Show less Reply Cocquereaux Camille 11 October 2016 As we know innovation and competition are closely linked. Competition affects innovation, indeed the incentive to innovate depends on the market structure. And in the same way, innovation is used as a tool to have a competitive advantage. To innovate firms invest in R&D, to be sure to collect the money from their new inventions firms use patents. Patents…Read moreAs we know innovation and competition are closely linked. Competition affects innovation, indeed the incentive to innovate depends on the market structure. And in the same way, innovation is used as a tool to have a competitive advantage. To innovate firms invest in R&D, to be sure to collect the money from their new inventions firms use patents. Patents have positive and negative effect. It can motivate the innovation but it can also be a source of waste when different firms invest for the same purpose because at the end only one firm will earn money from its innovation. An example of a very know patent race is found in the smartphone industry. The concurence in these markets progress with new manufacturers (LG,ZTE,Lenovo,..).Moreover these markets are in recession. It’s why to stay competitive in these markets they have to innovate or to be more effective than the other (fast processor, improve the quality of the photo,…). Patent is then really usefull for the firms which invest to innovate. Patents protect them against counterfait. An exemple : Samsung is the leader of the smartphone industry with Apple. To stay competitive on the market, samsung has to stay at the edge of the technology. In 2015, Samsung spent 14,1 billions in R&D. On the 22nd of july 2016 Samsung Electronics announced that they sue Huawei (third worldwilde in smartphone) in Pékin. Samsung accused Huawei of 6 patents infringements. Samsung demands 24,14 million dollars in damage. However, patents are not always use for protecting themself. In these case, is it a revenge from Samsung? Indeed , in May 2016, Huawei sued Samsungn stealing 11 patents (4G, operating systems, software interfaces,…). According to Lee Dohoon, CIMB analyst, the objective wasn’t the money but the publicity made by these case.It was a marketing strategy. sources : – http://www.ipdigit.eu/2014/11/patent-races-pros-and-cons-2/, consulté le 11 octobre 2016. – http://www.lesechos.fr/tech-medias/hightech/0211153971234-samsung-poursuit-le-chinois-huawei-pour-violation-de-brevets-2016628.php, consulté le 11 octobre 2016. – http://www.lesechos.fr/tech-medias/hightech/0211153971234-samsung-poursuit-le-chinois-huawei-pour-violation-de-brevets-2016628.php, consulté le 11 octobre 2016. – http://www.developpez.com/actu/101672/Samsung-poursuit-Huawei-pour-violation-de-brevets-une-bataille-mediatique-pour-booster-les-ventes-de-smartphones/, consulté le 11 octobre 2016. – http://fr.reuters.com/article/technologyNews/idFRKCN1020OL?pageNumber=2&virtualBrandChannel=0, consulté le 11 octobre 2016. – http://www.commentcamarche.net/news/5863135-samsung-et-apple-en-tete-du-marche-des-mobiles-mais-la-concurrence-augmente, consulté le 11 octobre 2016. Show less Reply César de los Ríos 11 October 2016 In order to evaluate the benefits of patent races, one should always know the characteristics of the particular industry that is affected by the race, especially the ones of the final product and the human capital intensity of said industry. That is, one should differentiate between (making an assumption about two possibilities of the final product) a socially valuable product…Read moreIn order to evaluate the benefits of patent races, one should always know the characteristics of the particular industry that is affected by the race, especially the ones of the final product and the human capital intensity of said industry. That is, one should differentiate between (making an assumption about two possibilities of the final product) a socially valuable product (like water or healthcare) and a not vital product (like smartphones); as well as between a highly human capital intensive industry (like the telecommunications one) and a physical capital intensive one, because, as we can imply from the blog post, it is more likely for companies to reach the same innovative result in highly physical capital intensive industries and, on the other hand, the socially valuable products industries must be approached carefully, as wasting resources on an unsuccessful patent race would be detrimental in terms of social welfare, as Gómez (see reference #1) specifies. It can be implied from the connection of last paragraph and the blog post that highly human capital intensive industries are more prone to generate a social benefit through patent races than other industries. We can set a particular example using the case of the wearables market (also known as smart watches), where “Samsung is beating Apple (and Qualcomm) in the patent race”, owning 4% of the 41301 patents approved in the wearable industry between May 2010 and May 2015 (see reference #2). Although the results may be very similar (compare, for example, Apple Watch and Samsung Galaxy Gear), the patent race may actually be socially beneficial as the product is not a first need. We can find another example in the chemical-genetics industry, where companies like Celera Genomics (6500 demands for patents) and Athersys (10000) (etc) compete for patents for development of new genes (see reference #3). In this case, these patent races may be detrimental to social welfare, as genetic innovations may save lives in the future and the races may result in the same outcome, which would mean that resources are being misallocated, as specified in the first paragraph. References (in Spanish) 1) https://goo.gl/oDlpmP 2) https://goo.gl/NbrKKF 3) https://goo.gl/x76Oyy Show less Reply Maxime Servais 10 October 2016 Innovation is used by a firm as a strategic tool to outperform its rivals. That’s the reason why many firms usually compete against one another to discover inventions first and get patents protecting their findings. On the one hand, this can lead to wasteful investments in R&D but on the other hand, it can speed up the innovation process and…Read moreInnovation is used by a firm as a strategic tool to outperform its rivals. That’s the reason why many firms usually compete against one another to discover inventions first and get patents protecting their findings. On the one hand, this can lead to wasteful investments in R&D but on the other hand, it can speed up the innovation process and yields different results. The process just described above is typically referred as a “patent race” where each company invests in R&D in hope of obtaining a patent. One can be wondering whether such races are beneficial for the society seen as a whole as firms might be investing too much or too little on R&D expenditures. It also raises the question of whether patents should be made shorter, longer, narrower or broader. These questions have been examined over and over again and yield complex results. The patent system must be designed to encourage innovation while carefully weighing the benefits of quick innovation against possible harmful costs generated by races (Judd et al., 2011). The point I will develop here is that this problem should be addressed industry by industry. With an increasingly growing complexity in modern technologies, the patent law are not always well suited for some industry. Let’s take a deeper look at the 3D printing industry to illustrate my point. Contrary to popular beliefs, the 3D printing industry has been around for a while and most patents were issued before the turn of the century and are now reaching their lifespan. The main implication is that many established companies now seek to protect their market share from an increasing number of entrants. As a result, we have seen an increasing number of companies going to court for patent infringement these last few years. If we look at the price of 3D printers on the market now compared to 15 years ago, one quickly realizes their price has dropped significantly. These machines are also more efficient than in the past. In my view, this drop in price and increase in efficiency could have happened sooner if only companies had invested more in R&D to develop the 3D printer back in the days. Hence, from a social point of view, there weren’t enough companies investing in R&D and racing for a patent which led to low performance and a high price (unaffordable for most people). In this case, it might have been better if regulators had put in place mechanisms to encourage companies to invest more in R&D (lower taxes, etc). In this specific industry, had the regulators understood the pros of a patent race, they could have created an environment suitable for companies to encourage them to invest more in R&D. As a result, the price of 3D printers might have dropped sooner and they would be more common on the market nowadays. Sources : https://www.innovationpolicyplatform.org/content/patent-races https://3dprint.com/151221/envisiontec-formlabs-ip-view/ https://techcrunch.com/2016/05/15/how-expiring-patents-are-ushering-in-the-next-generation-of-3d-printing/ Show less Reply Amandine Bolle 10 October 2016 The patent race has some pros and cons and I will discuss some of them. First of all the article is about patent race but sometimes it’s more a war than a race. For example, Apple and Samsung often go to court because they violate patents of each other. These two firms are in a patent war for many years. Although…Read moreThe patent race has some pros and cons and I will discuss some of them. First of all the article is about patent race but sometimes it’s more a war than a race. For example, Apple and Samsung often go to court because they violate patents of each other. These two firms are in a patent war for many years. Although three days ago, the U.S. Court of Appeals established that Samsung has to pay $120 million to Apple because he has violated an Apple’s patent. Secondly the patent race depends on the industry and on the size of the firms. It is not the same on the fashion’s market compared to the smartphone’s market. Effectively, on the smartphones’ market, there are new innovations all the time because it exists for ten years. Compared to fashion, where there are innovations but it’s often old ideas that are renewed. Thirdly there is only one winner at this race so firms are losing time, effort, money… and the fact that there is a patent on an innovation doesn’t mean that this innovation will be a success. In my example, Apple and Samsung are losing or wining money by suing each other. They should invest their money in research for new technologies instead of spending it in trial. I think that the firm that doesn’t have the patent should receive a compensation for its loss of resources. In conclusion, the patent race is an excellent system to stimulate innovations but there are still some issues that can be improved. Sources: http://www.geekwire.com/2015/samsung-surges-past-ibm-to-claim-u-s-patent-crown-for-2015/ http://www.huffingtonpost.com/entry/apple-samsung-fight_us_57f7df8ce4b068ecb5de047d? http://www.dehns.com/site/information/industry_news_and_articles/infringement_action_for_a_standard_essential_patent.html Show less Reply Jonathan Seghers 9 October 2016 Of course, patent races are useful in order to protect intellectual property. It takes a lot of time and resources to find something new, then why should the company not be rewarded for it? It always goes about profitability and competition. Yes, it is important but organizations forget (too) often the final consumer. We should not forget that patents create situations…Read moreOf course, patent races are useful in order to protect intellectual property. It takes a lot of time and resources to find something new, then why should the company not be rewarded for it? It always goes about profitability and competition. Yes, it is important but organizations forget (too) often the final consumer. We should not forget that patents create situations of monopoly which are not good at all for consumers. Let’s take an example: some drugs are now so expensive that poor people cannot offer those for themselves. Why is that possible? Because there is no rules or control on how companies set their prices. In some markets like this one, profits should not come first but social benefit should… Collaboration may help companies to reduce their R&D investments: a company can cooperate with another competitor in order to spread the costs. If costs are reduced, it also means that they can set their price at a lower value. I will describe this with an actual example: Microsoft and Toyota are actually working together in order to create/research on intelligent energy consumption (see CO Business 2013). And then, it will introduce new issues as threats not to collaborate any more, would it be more profitable for me to go alone… Companies will always be guided by profitability. Social and money should be linked into a new kind of profitability and then taken into account by managers. Sources : https://www.monde-diplomatique.fr/2012/08/BAKER/48031 http://web.stanford.edu/~judd/papers/OptimalPatentRules.pdf ftp://mse.univ-paris1.fr/pub/mse/cahiers2004/Bla04057.pdf http://www.co-society.com/wp-content/uploads/CO_business_2013.pdf Show less Reply Elida Axundzada 11 October 2016 In this comment, I will give a definition, and I will explain the two types of patent races. After, I will compare the advantages and the disadvantage of this one and I will develop its impacts on the large and small firms. Finally, I will conclude with my personal opinion. The patent races consist to the two or several inventors who…Read moreIn this comment, I will give a definition, and I will explain the two types of patent races. After, I will compare the advantages and the disadvantage of this one and I will develop its impacts on the large and small firms. Finally, I will conclude with my personal opinion. The patent races consist to the two or several inventors who want to find an invention for the prize of obtaining the patent. Therefore, it’s a competition between two or more inventors to discover an invention first in order to obtain the patent protection and to exclude competitors. There are two types of patent races. The first type is the standard race where there is a winning firm that obtain the patent and the losers firms. The second is the asymmetrical races, there is an incumbent firm that “tries to prevent a rival from filing a patent first and thereby avoid competition”. The latter, it focuses particularly to sustain its monopoly position rather than to increase its innovative performance. We know the critical role played by patent in our society but it’s important to not forget also their negative effect. It encourages an increase in investment but also in innovation. In particular, in the pharmaceutical sector which their survival depends on the innovation of new products. In my opinion, in this case, the patent races have a critical role and have to be developed more. Nevertheless, the benefit of quicker innovation can lead to harmful cost. The effects of patent races are different on large and small firms. On the one hand, I think I am pros especially for the small firms. The patent allows to improve their license for the innovation more than the large firms so it’s crucial for small innovators when they face competition from larger firm in technology markets. For example, when there are many large firms in the market, there is a rivalry and thus, the patent is important for them. On the other hand, the presence of large firms improves the negotiation of small firms so the licensing rent. In addition to that, the large firms are well-positioned to compete in developing and commercializing innovation than small firms. Finally, I think the effect of winning patent race is more remarkable for large firms, but it improves more a project level rather than a firm level because of their important portfolio of research. At the patent level, leaders do more follow-on research. For my part, the firms engaged in a patent race conduct an improvement in R&D. On the contrary, the losers of the patent races tend to abandon their application and to let the protection lapse by not making maintenance payments. To conclude, the patent races are critical and frequent in our society and they have important effects on the direction of innovation but they have to be evolved to minimize the negative impact. Sources: https://www.innovationpolicyplatform.org/content/patent-races http://www.law.northwestern.edu/research-faculty/searlecenter/events/innovation/documents/GalassoSchankerman_16June16.pdf http://www.neil-t.com/wp-content/uploads/2016/09/Thompson_and_Kuhn-Patent_Racing-2016-09-02.pdf Show less Nicholas Chin 9 October 2016 While the thesis of the catch-22 relationship between innovation and competition is rooted with concrete examples, it fails to acknowledge the trend of information flow. While in previous generations where the primary medium to transmit information from one party to another has been physical books, technology has revolutionized information sharing and in consequence, also how we innovate. Innovating can be…Read moreWhile the thesis of the catch-22 relationship between innovation and competition is rooted with concrete examples, it fails to acknowledge the trend of information flow. While in previous generations where the primary medium to transmit information from one party to another has been physical books, technology has revolutionized information sharing and in consequence, also how we innovate. Innovating can be defined as improving processes or creating solutions that make the current option irrelevant. It is therefore important for innovators to study the current market, identify gaps and then execute on their ideas. This is rooted in information sharing. To learn about current options and what stakeholders value, it requires a significant amount of time and resources to understand all elements (essentially the R&D department’s role). Technology, specifically the internet has made information ten-fold more accessible than it was in the past and subsequently accelerated growth for a more an more efficient industry. And this is the significance of patents – it protects knowledge and appropriates where credit should be given and provides a framework for information sharing. However, the IP system is dated and caters to a pre-internet and a less enlightened society. Going forward, it would be of keen interest to maintaining our innovations growth to restructure the patent policy to be a less stringent, but only for the more sensitive and liberal industries (ie. not pharma in its current state). We are moving towards a share economy, from housing (ie. AirBnB) to transport (ie. Lyft, Uber) and who is to say that this same mentality should not be implicated with knowledge. Irrespective of the difficulty of the problem, it has been shown time and time again that multiple parties working collaboratively can be more efficient than isolating the parties and having them work on the problems independently. For example, NASA’s open source development program has examples of finding solutions for complex astrophysical problems in as little as 13 days compared to their researchers struggling for 6 months. This exemplifies the power of collaboration. This theory would be harder to implement in more conservative industries (ie. pharmaceuticals) because of the hierarchical protocols associated with these companies. Larger investments into R&D and larger margins are vital to stakeholders in the company and when vying for resource allocation to R&D, the investors will expect a significant ROI. And this is the real problem, competition itself as opposed to collaboration. But that’s more of a debate with capitalism. Nevertheless, I speculate a share economy of information (in a vacuum) would yield a steeper innovation growth curve than our current system. The current IP system is more restrictive and creates redundancies as mentioned in the post above – two competitors investing resources to yield the same result, but only one will receive the notoriety for it, making the other’s efforts in vain. But why can we not remove the barriers between the competitors and turn them into collaborators. Of course this is industry specific and contradictory to certain capitalism ideologies, but on the contrary it will maintain if not further amplify our innovation growth curve. Show less Reply Martina De Luca 9 October 2016 Market of patents is in continuous evolution, that’s why we can find examples of patent races almost in every field. A part from the classic examples concerning technology (softwares, communication tools, but also robotics) and pharmaceutical world (drugs and medicines), I personally consider as example of a patent race the patent race itself. Having patents and filing ideas is a market…Read moreMarket of patents is in continuous evolution, that’s why we can find examples of patent races almost in every field. A part from the classic examples concerning technology (softwares, communication tools, but also robotics) and pharmaceutical world (drugs and medicines), I personally consider as example of a patent race the patent race itself. Having patents and filing ideas is a market itself and firms compete to have more and more patents. In fact, there exist many start-ups whose purpose is to file as many patents as they can and do it as soon as possible. Their intents are many: first, to become more visible and important on the market because more patents make them more valuable to investors; furthermore they gain more time to develop their idea. This is possible from 2011, at least in the USA, where the US law has changed and gives the patent to the first who files its idea, and not to the first who invents it anymore. This implies also that an idea protected by a patent does not necessarily mean that there has to be a tested process: thus firms can invent a product, file it to get the provisional patent and eventually they have one more year to really develop it, looking for investors and doing experiments. (Provisional applications hold the patent for one year). During this time firms granted patents can also protect their future products from infringement by others and, if they can afford it, they can sue everyone having the same idea. An example of that mechanism is Apple: every year it spends a huge amount of money to sue other big firms such as Samsung and Google just to prevent them from extending their market and the sale of their products. However, not many firms can afford legal offices like that of Apple’s. So patents are not always granted to the best ideas and this makes me think of a question: are we sure enough that patent races are the best way to incentive new creations and new ideas? The fact that the “winner” of a patent race is the firm that first has reached the objective and invented a new tool, engine, drug, software and whatever we have in mind, makes me reflect about the quality of research that is done in the smallest period possible. As already pointed out in previous comments, a fierce competition in patent race is in the pharmaceutical world, where the first you invent, the more you earn and fix your own price. And we all know that some of the new drugs in the market are just modifications or improvements of already existing medicines on which a patent already exists. Therefore it is evident that patent races have to be slightly modified in order to work well and to produce real benefits to everyone. http://www.inc.com/magazine/201306/issie-lapowsky/patent-race-move-fast-or-youre-screwed.html https://www.linkedin.com/pulse/great-patent-race-j-cafesin https://www.legalzoom.com/articles/how-long-does-a-patent-last https://www.innovationpolicyplatform.org/content/patent-races Show less Reply Marc Abou Jaoude 9 October 2016 It is undeniable that, in an era dominated by technological progress, the race for patents has become a big factor. I will however commence by raising the argument that this race may not be as substantial as many people think. I will refer to the two titans in the smartphone industry to help highlight my point: Sumsung and Apple. In…Read moreIt is undeniable that, in an era dominated by technological progress, the race for patents has become a big factor. I will however commence by raising the argument that this race may not be as substantial as many people think. I will refer to the two titans in the smartphone industry to help highlight my point: Sumsung and Apple. In 2015, the enterprise Apple was granted 1938 patents which may show the importance and scale of patents in the market of technology. That being said, these patents have not killed off their main rival, Sumsung which shows that they may not be as significant as previously assumed. The idea that the race to patent kills off competitors is a broad, primitive and in my opinion false claim. There is rarely a situation in which Sumsung and Apple have raced to patent one specific technological feature significant enough to harm one another. The idea that there is often a race to patent the same one innovative feature is an over exaggeration. To further dispute the «winner takes all » perspective brought up in the blogpost, I will evoke the principle of cooperation. Cooperation leaves the aforementioned perspective redundant because even if a big player on a market patents a particular innovation, that firm is sometimes inclined to share it with their rivals for mutual gain. We can again bring up the example of Sumsung and Apple who often cooperate irrespective of their patents. In the grand majority of markets this « winner takes all » theory is overstated. All this being said, I will concede the fact that in some industries where innovation is both drastic and scarce, the race to patent may be significant. An example of such an industry is the mining industry that has seen very little innovation in the last decade. It is an industry that consumes high levels of energy and a breakthrough idea could revolutionize this industry and run the competitors out of the market. The underlying point I’m trying to make is that it is hard to judge the impact and significance of this race for patents as it varies heavily based on the markets and firms in question. For instance, in markets with high levels of competition in which innovation is rare, the race for patents may be vital for a firm to kill off competitors. In most cases however, there is seldom only one idea, one patent, that all the firms in the market must strive towards. There are multiple ideas and multiple means available to a firm that lead to the same end goal. An example of such a market is the market of technology. The idea that all the firms in a market aim to patent the same one idea is unrealistic. One may therefore argue that patents are of little harm to a market. In conclusion, I will provide one argument against the craze of patents. It is a craze that heavily favors the large firms in a market as patents are often costly. Small firms may not necessarily be able to afford the administrative costs linked to constant patenting. This is a point argued in the « extremtech » blog. On the whole, patents may prove to be a strain on competition, whether it be through the costly process itself, or through blocking patents destined to hinder rivals (a threat that is recognized and detailed in the European Competition Law policy.) Sources and Extra readings Statistics linked to apple’s patents http://appleinsider.com/articles/16/01/13/apple-takes-11th-place-in-awarded-us-patents-in-2015 Examples of industries devoid of significant innovation http://www.huffingtonpost.com/young-entrepreneur-council/10-industries-that- could_b_6084026.html Ideas reflective of the fact that patents may harm innovation http://www.extremetech.com/computing/101939-the-patent-war-is-it-killing-innovation Further readings on how patents may hinder competition European Competition Law Annual 2005: The Interaction between Competition law and intellectual property law Show less Reply Moeko Miyai 8 October 2016 All of you may know the firm “Canon” which is a Japanese camera maker. Canon is also one of the challenge’s companies in the patent race. Firstly, let me review what is a patent race. According to this article, patent race is a competition between two or more firms to achieve their goal to be a first applicant of a patent…Read moreAll of you may know the firm “Canon” which is a Japanese camera maker. Canon is also one of the challenge’s companies in the patent race. Firstly, let me review what is a patent race. According to this article, patent race is a competition between two or more firms to achieve their goal to be a first applicant of a patent in the same field. There are two opposite evaluation of the patent race. One is that patent races accelerate innovation because inventors are stimulated by other innovation. The other is that patent races make wasted effort, because only the first person who achieved to file patent can get award. The effort of other inventors who are going to innovate something to get a patent is wasted. Like this, there are pros and cons about patent races. In my opinion, patent races contribute to society economically. Patent races make cycle to produce high-quality things. Inventors are stimulated by other innovation, so even if their effort to be in vain, they try to invent better one. To be repeated this cycle, the products will become more convenient, and technology will progress. For example, Canon, which I mentioned above, also challenged its rival. At that time, Haloid occupied the plain paper copier market completely. Canon challenged to invent new type of coping machine to tap a new market for them. At last, they succeed to invent original coping machine. And now, it became the global market share second place. Challenging patent which already exist is hard but it also contributes to our life, and firms can get profit via patent. Even if one’s effort to invent something to be in vain, to make cycle that affected by the innovation, bring innovation more than it will give us welfare and make society abundant. Sources: http://www.alrc.gov.au/publications/2-patent-system/economic-benefits-patent-system https://www.uspto.gov/learning-and-resources/ip-motion/intellectual-property-and-us-economy http://www.canon.com/technology/approach/history/print-tech.html Show less Reply Cristina Brito 8 October 2016 The last decades have witnessed a great increase in the number of patents, with its sources and economic effects being extensively discussed. Firms engage in patent races – where, naturally, the final prize is obtaining the patent - in an attempt to protect its invention from competitors. Following this, we could think of patents as being as a source of innovation…Read moreThe last decades have witnessed a great increase in the number of patents, with its sources and economic effects being extensively discussed. Firms engage in patent races – where, naturally, the final prize is obtaining the patent – in an attempt to protect its invention from competitors. Following this, we could think of patents as being as a source of innovation aiming for increased efficiency and, consequently, greater overall welfare. Notwithstanding, the outcomes are much more complex than this. To start, and as mentioned on a research about Optimal Rules for Patent Races, there are two important rules in a patent race: what an innovator must accomplish to receive the patent and the allocation of the benefits that flow from the innovation, whereas most patent races end before R&D is completed and the prize to the innovator is often less than the social benefit of the innovation (Judd, K. et al. 2007). Also, and regarding the possible causality between patents and innovation, it becomes crucial to distinguish between two types of patent races: standard races – in which the wining firm obtains the patent, where the competitive element may have positive effects in accelerating innovation – and asymmetrical races – where an incumbent firm tries to prevent a rival from filing a patent first and, thus, avoid competition (Harris and Vickers, 1985). All in all, what could work as a tool to boost innovation towards a more efficient world may end up posing as a purely-profit and anti-competition driven approach. Let’s look at the particular industry of technologies. As technologies become more interdependent and innovation relies more on fragmented proprietary knowledge, there are rising concerns about innovation and commercialisation of technologies becoming more and being held backed by patents, while at the same time many patents correspond to a new wave of inventions which might have not appeared without patent protection (Guellec, D., Zuniga, M. 2007). On one hand, the work of economists such as Arrow (1962), Schmookler (1966) and more recently Scotchmer (1999), and Gallini (2002) have found that patents continue to foster ex ante innovation, as they induce people to invent due to the prospect of profiting from inventions (a good example is that of the biggest job-creating new industries such as semiconductors PCs, software, biotech or mobile telephony, that grew strong on the basis of patented inventions). On the other hand, many believe that today’s patent regime sets innovation back, arguing that studies have found that 40-90% of patents are never exploited or licensed out by their owners – hence, that patents should come with a blunt “use it or lose it” rule, so that they expire if the invention is not brought to market (Time to Fix Patents, The Economist. 2015). Overall, it is my opinion that patents represent a very crucial tool in nowadays economy, but it is not less true that its benefits are controversial. Thus, it is “just” a matter of solving how to make the most (good) of it – targeting social welfare maximisation. (patent wars remain a hot topic: even yesterday, the long time Apple vs. Samsung patent war was rekindled with Apple winning an appeal reinstating $119.6 Million Samsung verdict). Additional Sources: http://www.bloomberg.com/news/articles/2016-10-07/apple-wins-appeal-reinstating-119-6-million-samsung-verdict https://www.bloomberg.com/news/articles/2016-02-26/apple-loses-appeal-in-119-6-million-samsung-patent-case http://www.forbes.com/sites/marshallphelps/2015/09/16/do-patents-really-promote-innovation-a-response-to-the-economist/#318258c76745 http://www.economist.com/news/leaders/21660522-ideas-fuel-economy-todays-patent-systems-are-rotten-way-rewarding-them-time-fix http://www.nytimes.com/2012/10/08/technology/patent-wars-among-tech-giants-can-stifle-competition.html?_r=0 https://www.innovationpolicyplatform.org/content/patent-races Show less Reply Nicolas Juckler 8 October 2016 Patents were originally developed to help protect an inventor's novel idea and the market share the idea might generate, and also promoting innovation. A patent race is a competition between different firms to discover an invention first and to protect it with a patent to protect it from imitation. The patent race have the advantage of encouraging innovation but also the disadvantage…Read morePatents were originally developed to help protect an inventor’s novel idea and the market share the idea might generate, and also promoting innovation. A patent race is a competition between different firms to discover an invention first and to protect it with a patent to protect it from imitation. The patent race have the advantage of encouraging innovation but also the disadvantage of generating wasteful duplication of efforts. But are patents eventually good or bad for innovation? Some industries are struggling with patent laws. Indeed, patent infringement have cost innovators 500$ billion over the past 20 years. With the arrival of “patent trolls” (companies that buy up patent to sue other companies for patent infringement) the current climate of patent law is maybe killing the innovation. In the smartphone industry, the patent race is slowly becoming a patent war. Patent lawsuits started to seriously head up in the smartphone industry. Smatphone patent lawsuits are so many that they start influencing the way the industry innovates. Patents are used as weapons in the mobile industry to obtain advantage, and monopolize the markets. If the manufacturing company have enough relevant patents, the company can monopolize all the market. With as result that some smartphone manufacturers buy other companies only for their patents. For example, Google purchase Motorola Mobility which included the acquisition of the 17.000 Motorola’s patents. We can notice that “Defensive patenting” is becoming an offensive strategy. Patent’s quantity becomes more important than the patent’s quality. The current patent system is leading to the abuse of parent in the mobile industry. The USPTO have to find ways to reduce the number of patents that are released to struggle this patent war in the mobile industry and force the manufacturers to use their patents only for a defensive purpose. Sources : https://www.innovationpolicyplatform.org/content/patent-races/ http://www.businessinsurance.org/5-industries-struggling-with-patent-laws/ http://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?article=1071&context=jolti Show less Reply Axelle Charlier 7 October 2016 When changes in the race of innovation occur, they seem to have little to do with patents. That’s the observation on which I will base my comment. Indeed patents are made firstly to provide a higher rate of protection in case of innovation and secondly to reward innovative ideas. But is this race for patent really being useful for the…Read moreWhen changes in the race of innovation occur, they seem to have little to do with patents. That’s the observation on which I will base my comment. Indeed patents are made firstly to provide a higher rate of protection in case of innovation and secondly to reward innovative ideas. But is this race for patent really being useful for the future of our society ? Are they achieving their goals in terms of innovation growth and rewarding process ? If we take the simple example of the “innovation exhibitions” that are organizedinternationally where every country are exhibiting their best findings of the year, it appears to be no difference between countries with string patent laws and countries that lacked patent protection system. They were no less innovative (I don’t understand the meaning of this last sentence) From another research we found out that reforms aimed to improve and strengthen patent system (see Japan in 1988) did not boostinnovation nor R&D spending. Based on those arguments, I would argue that patenting every single finding is not efficient for the economy growth. Other examples of past experiences will tell that expansions or changes in patents do not necessarily lead to an increase in productivity (see in 1970 in America expended patent protection to crops that reproduce sexually- la phrase n’est pas claire). It is good to note that most of the greatest inventions were made without patent times before the restrictions imposed by the patent protection systems. Patents are not only negatives, they certainly offer advantages and their existence is due to a reason. In complex manufacturing businesses processes, like aerospace and automotive for example, the control of the intellectual property is a small part of what is really needed to succeed on a competitive market but it is very important to encourage the companies to make better products and new products. Patents are still very useful in some industry (strongest in pharmaceutical) so Ithink they shouldn’t be erased but improved to better fit our society and the market. It’s a changing process and patents must evolve at the same pace to ensure minimum negative impact. Sources: https://uaemevidence.wordpress.com/2016/04/15/a-liberal-economists-perspective-on-why-patents-may-not-promote-innovation/ http://www.economist.com/node/21660559 Show less Reply Brasseur Sophie 7 October 2016 A patent race is the definition of the competition between two or several firms to discover an invention first in order to obtain patent protection for the invention and exclude competitors. We can think of it as positive way (encouraging and increasing innovation) but it is also, and especially from my point of view, a system that hurts the economy…Read moreA patent race is the definition of the competition between two or several firms to discover an invention first in order to obtain patent protection for the invention and exclude competitors. We can think of it as positive way (encouraging and increasing innovation) but it is also, and especially from my point of view, a system that hurts the economy and the public interest. Indeed, seeing two of more firms waging war, absorbing in passing of thousands of dollars, using the pretext of protecting innovation is quite distressing. But is there really no other ways to stimulate the invention of useful products? An outstanding example would be the price of drugs in the pharmaceutical industry. There is no legislation on pricing for patent holders, which means that drugs can therefore be sold several hundred dollars, while they would cost a fraction of that of a truly free market. Concretely, the conditions that make patent protection essential in the pharmaceutical industry are absent. Another extreme example occur in the software industry. Nowadays, most software innovation is progressive but also ephemeral: most software inventions are quickly outdated and likewise surpassed. Software innovation tends to be small important parts, components, so that a software equipment (cellphone, tablet, laptop, etc.) may have tens or even hundreds of thousands separate components. Each one of these components are potentially patentable. The result is a huge set of patents, creating rich opportunities for trying to hamstring competitors by suing for infringement and also for infringing. There exist further obstacles to effective patent policy in the software industry. That includes a lack of patent examiners with the required technical skills, the limited technical competence of judges and jurors. It is also more difficult to estimate the damages for infringement of a component instead of a complete product. Finally, problems occur because of the instability of the software industry and of its technological dynamism, which creates incentives both to patent and to infringe patents and thus increases costs. Accordingly, it hurts the consumers and their purchasing power but also the firms which tried to compete but lose. Even if I used extremes examples such as pharmaceutical and software industries, there are plenty of industries in between that suffer from excessive patent protection. Despite the fact that they experience it maybe in a less intensive way, some major amendments are, in my sense, after all my readings, necessary. Therefore, tougher and more consistent legislation in the matter of pricing, … should be considered in order to make the patent race optimal and beneficial for everybody. Sources : http://www.bu.edu/law/journalsarchive/scitech/volume131/documents/wei_web.pdf http://www.infoworld.com/article/2623291/patents/debating-the-pros-and-cons-of-software-patents.html http://www.becker-posner-blog.com/2012/09/do-patent-and-copyright-law-restrict-competition-and-creativity-excessively-posner.html http://www.lexology.com/library/detail.aspx?g=3cee685b-01d3-4072-8317-2af4b16b9e1e Show less Reply Akshat Prakash Verma 12 October 2016 Patent races were designed to protect as well as stimulate innovations. And to the end that objective is concerned, they do a perfectly good job. Companies invest a lot of resources in R&D and with no protection, it will not be possible for them to recover their investments and at the end of the day, a firm is an economic…Read morePatent races were designed to protect as well as stimulate innovations. And to the end that objective is concerned, they do a perfectly good job. Companies invest a lot of resources in R&D and with no protection, it will not be possible for them to recover their investments and at the end of the day, a firm is an economic agent that is out there to make money. And being the first one to innovate and file a patent grants them with that opportunity. But I would like to argue that patent races don’t kill off competition and it is certainly not a “winner takes all” situation in many cases. In industries where intellectual property is the main driver of market share, there exist ample opportunities for firms to bring new products and create new market niches like the pharmaceutical industry or the technology industry. Here I’d like to draw on my own experience of working in the Multiple Sclerosis market in the US & Europe. There are 4 companies who produce drugs for MS and no one clearly dominates the market. The reason for that is that there are so many opportunities present to innovate – like the drug dosage, mode of administration (oral or injection), mode of action (pegylation or no pegylation) etc. And by varying the above factors, the companies keep coming out with new, improved drugs, which benefits the patients. Each drug caters to a market niche – there are patients with severe/mild MS, patients with high relapse rates/low relapse rates, patients who prefer oral/injectable drugs etc. Patent races, in fact, also promote collaboration. We’ll again take the example of pharmaceutical industry, where these days, the trend is to have smaller companies invest resources in R&D and innovate and the larger firms will conduct clinical trials and market the drug. In economic terms, both the firms are now better off and it takes both to a higher level of utility, thus creating a Pareto Optimal situation, which is good. But, patent races do have their disadvantages. The first is that the firms may not take care of the consumer’s interest, which is evident in the sky-high drug prices in the US, because their they can extract high rewards through their market power. But, this can easily be taken care of by strengthening Intellectual Property laws or putting a price ceiling. Take for example India, which is a country that doesn’t have a state provided insurance for its citizens. So, their laws prohibit the drug companies to price their drugs at their desired level. Also, it is not easy to get a new patent granted with only minimal changes in already patented drugs, something that was seen when Novartis failed to get a new patent for its cancer drug, Glivec. As a result of such restrictions, the drugs are within the reach of most of the citizens. So, in my opinion, patent races do have their pros and cons, but from where I stand, there are more pros than cons and in the long run, patent races help in improving the well being of society as a whole. References:  http://www.theglobeandmail.com/report-on-business/small-business/sb-money/big-pharma-turns-to-smaller-firms-for-innovation/article12751137/ http://www.wsj.com/articles/SB10001424127887323296504578395672582230106  https://www.parexel.com/parexel-insights/innovation-pharmaceutical-industry-change-toward-personalized-medicine  https://www.innovationpolicyplatform.org/content/patent-races  http://dspace.mit.edu/bitstream/handle/1721.1/2522/SWP-3710-31904694.pdf?sequence=1&origin=publication_detail Show less Laurence Vanhove 7 October 2015 “Like everyone we get frustrated by products that don’t work properly. As design engineers we do something about it. We’re all about invention and improvement.” – James Dyson – Inventor of cyclonic vacuum technology When reading this article, I immediately thought about Dyson and their strength in innovation. James Dyson’s innovation story was born with his frustration to see his…Read more“Like everyone we get frustrated by products that don’t work properly. As design engineers we do something about it. We’re all about invention and improvement.” – James Dyson – Inventor of cyclonic vacuum technology When reading this article, I immediately thought about Dyson and their strength in innovation. James Dyson’s innovation story was born with his frustration to see his vacuum cleaner lose its strength day after day. He therefore tried to implement a technology he had developed on an industrial scale into a vacuum cleaner. It took him 5 years and 5 127 prototypes to invent the world’s first bagless vacuum cleaner. If he hadn’t patented his innovation, James Dyson would have never been were he is today. Indeed, by selling his first machine under license to a Japanese company he was able to start working on a new bagless vacuum cleaner that wouldn’t lose it’s suction. Dyson’s example perfectly translates the double relationship between competition and innovation as mentioned in this article: with a strong market in the UK based on the dustbags themselves, he had no chance to introduce his first bagless vacuum cleaner there at that time. However, there was a market for him in Japan. By later improving his product in his own company with a new cyclonic vacuum technology, he definitely gained his competitive advantage: many other companies have released bagless vacuum cleaners since, but none have outperformed Dyson. By patenting his cyclonic vacuum technology, Dyson managed to secure its dominant position on the market, for example when Hoover produced its own “Triple Vortex” vacuum cleaner using similar technology. After losing the lawsuit filed by Dyson, Hoover was forced to remove its product from the market and to pay damages. This illustrates the disadvantage of wasteful duplication efforts. As a well-established firm, Dyson now excels in patent races. Indeed, according to their website, the company now owns over 3 000 patents covering more than 500 inventions. Although according to the article “patent races have the potential advantage of spurring innovation”, the Dyson – Samsung lawsuits reflect in my opinion the major issue of patent races: over-patenting that leads to the birth of patent trolls. While Dyson filed (and lost) a lawsuit against Samsung for a steering mechanism, the latest counterattacked by suing the first for “copy cat allegations” and denouncing them as patent trolls. I believe that although it is necessary to (excessively) protect innovations and further improvements, the border is hard to define between protection and use of patent rights to abusively attack competitors and make profit on it. While patent trolling can bring up a lot of money, I also believe that it can kill a companies’ reputation. The question is thus is what is the final purpose of patent-races: protection or profit? Hoover loses patent infringement case VACUUM CLEANER DYSON VICTORIOUS IN BAGLESS MACHINE CASE:[London edition] Marsh, Peter; Mason, John. Financial Times 04 Oct 2000 http://www.bbc.com/news/technology-24023430 http://businesscasestudies.co.uk/dyson/innovation-research-and development/patents.html#axzz3nuSt802n http://www.dyson.com/community/aboutdyson.aspx http://www.telegraph.co.uk/news/uknews/1368860/Dyson-cleans-up-in-patent-battle-with-rival-Hoover.html http://www.wired.co.uk/news/archive/2014-02/17/dyson-samsung-lawsuit Show less Reply Loïc de Liedekerke 7 October 2015 The history will remember that it is G.Bell who was the first to invent the phone. But he was not the only one. His concurrent E. Gray also invented a phone but nobody has ever heard of him. Why ? Because Bell reached the patent office a few hours before Gray. This example shows all the importance of the patent…Read moreThe history will remember that it is G.Bell who was the first to invent the phone. But he was not the only one. His concurrent E. Gray also invented a phone but nobody has ever heard of him. Why ? Because Bell reached the patent office a few hours before Gray. This example shows all the importance of the patent race. But that was in 1876! Nowadays, is this race still profitable and meaningful? For some reasons I will say that patent races have more cons than pros. In our economy the patents are no longer seen as protection tools but more and more as financial objects (1). Some companies are just creating and buying patents in a unique objective: make the maximum money out of it. They give property rights in exchange of high royalties and fees. With all those “Patent trolls” the innovators are blocked, it becomes such harder for them to do their jobs. When you know that the patent trolls are making the work of innovator harder and that the innovation is a way to make economic growth (2), we can conclude that patent races are negative for our occidental economy which needs growth to get out of the crisis. We can find other examples in the pharmaceutical industry. This one is known for their massive Investments in research and development, always looking for new drugs. In the past the patent races were really useful in this sector. It allows companies to make a lot of benefits by being the only producer of a drug. But at the end of the 20th century the “Big Pharmas” decided to reduce their R&D costs (3). So a new economic model appeared. SMEs pharma are developing the drugs and the big pharma put the commercialization and the production into place. The patent race is no longer needed because we have a “win-win situation” between companies. This model avoids waste of time and money. We can see that over the years, the perception of patent as changed. But in a time of crisis the patent races are negative because the economy needs innovation to create growth. We need to come back to the basic and not use the patent as a financial object. References: (1) http://www.lecho.be/entreprises/general/La_course_aux_brevets_peut_elle_tuer_l_innovation.9666520-7773.art?ckc=1&ts=1444229828 (2) http://www.hbrfrance.fr/chroniques-experts/2015/02/6127-la-course-aux-brevets-un-pari-gagnant-pour-les-entreprises/ (3) Ernst & Young quoted in the Economist June 4th2005, Fortune March 20, 2006, p.82 Show less Reply Cristina Rujan 7 October 2015 When it comes to patent races, the smartphone industry is one of the examples that immediately spring to mind. We have all heard about the never-ending disputes between the big players in the industry – Apple, Samsung, Microsoft, Google – giving rise to the so-called “smartphone patent wars”. A 2012 New York Times article  increased awareness about the…Read moreWhen it comes to patent races, the smartphone industry is one of the examples that immediately spring to mind. We have all heard about the never-ending disputes between the big players in the industry – Apple, Samsung, Microsoft, Google – giving rise to the so-called “smartphone patent wars”. A 2012 New York Times article  increased awareness about the fact that in only two years, $20 billion were spent on patent litigation and purchases in the smartphone industry alone. It was even claimed that, in 2011 Apple and Google spent more on patents and litigation than on innovating itself, and this is quite of a worrisome statement. It goes without saying that these firms rely heavily on patents from a strategic point of view, trying to sustain their competitive advantage as it was mentioned in the post above. The firms’ intense seeking of patent purchases has given rise to a significant amount of mergers and acquisitions within technology-related industries. Thus, a link between IPR and competition policy has been established in the past years, a link that should not be overlooked. On this note, I personally found Google’s acquisition of Motorola Mobility particularly interesting, as it provides a new perspective on how firms can use the patent war strategically. In August 2011, Google announced its intention to acquire Motorola after striking a deal amounting to $12.5 billion . Only two years later, the same company allegedly faces a sizable loss after selling Motorola to Lenovo for only $2.91 billion . I say allegedly, because in fact, even if the numbers are striking, Google’s merger with Motorola was a very thought-through strategic move that significantly improved its position in the recent patent war. Google made it clear from the very beginning that their interest in the merger stemmed exclusively from the patent portfolio that Motorola Mobility held. This particular patent portfolio was valued at $5.5 billion and was kept by Google after the sale of Motorola , emphasizing its importance for the company. The acquisition was purely strategic in the sense that it was meant to provide the open source operating system Android protection against possible patent infringement lawsuits from Google’s key competitors Microsoft and Apple . According to Google’s CEO, Larry Page , strengthening Google’s patent portfolio was, in fact, synonymous with an increase in competition, argument they used in defending the merger. The merger got cleared as it was proved that the vertical relationship was unlikely to impede effective competition in the relevant market. Not a surprising decision, since Google was not interested in engaging in anti-competitive practices, but rather in protecting its own position in the market. Essentially, this example constitutes more of a “defensive” dimension of the patent war. Only a week ago it has been announced in the press that Microsoft and Google “make peace”, having decided to settle no more than 18 cases of patent infringement against each other in the US and Germany . Could this be a sign that the big players in the market are tired of fighting this horrific war, tired of spending $billions on patent litigation instead of actually spending it on innovating? In a joint statement, the two firms basically mentioned that in order to benefit their customers, they might even consider collaborating in the future. This could be the beginning of a new and very interesting era, but that is yet to be seen. P.S. Patent wars have been given so much attention lately, that it even became the topic of a documentary released in 2014 (“The Patent Wars”) Sources:  Duhigg, C. & Lohr, S. (2012, Oct 7). “The patent, used as a sword”. The New York Times. Retrieved from: http://www.nytimes.com/2012/10/08/technology/patent-wars-among-tech-giants-can-stifle-competition.html?_r=0  Google. (2012). Facts about Google’s acquisition of Motorola. Retrieved from: https://www.google.com/press/motorola/  Lenovo. (2014). Lenovo to acquire Motorola Mobility from Google. Retrieved from: http://news.lenovo.com/article_display.cfm?article_id=1768  Page, L. (2011, Aug 2015). “Supercharging Android: Google to acquire Motorola Mobility”. Retrieved from: https://googleblog.blogspot.be/2011/08/supercharging-android-google-to-acquire.html  Merced, M.J. (2014). “Did Google really lose on its original Motorola Deal?”. The New York Times. Retrieved from: http://dealbook.nytimes.com/2014/01/29/did-google-really-lose-on-its-original-motorola-deal/  Chung, A. (2015). “Microsoft, Google stand down in patent battles”. Reuters. Retrieved from: http://www.reuters.com/article/2015/09/30/us-microsoft-google-settlement-idUSKCN0RU2Y220150930 Show less Reply Emelda Woutou Njiki 7 October 2015 After going through the text pros and cons of patent race, i would like to define patent race again. A patent race is a competition between two inventors (usually firms) to discover an invention first in order to obtain patent protection for the invention and exclude competitors. A good example for me is the pharmaceutical industry where firms go…Read moreAfter going through the text pros and cons of patent race, i would like to define patent race again. A patent race is a competition between two inventors (usually firms) to discover an invention first in order to obtain patent protection for the invention and exclude competitors. A good example for me is the pharmaceutical industry where firms go into agreement with smaller firms for example to delay the sales of cheaper drugs which as a result is detrimental to the welfare of its customers but beneficial to the both firms in terms of profit. Secondly, if these firms come out with new drugs to treat illnesses like Aids after spending much time in R&D, instead of delaying sales, it will make the firms to be more efficient. As a result, some of these new drugs can treat more illnesses effectively like the case of Aspirin is a good examples of treating multiple conditions starting from headaches to particular types of cancer and to know, it is the one of the drugs that is highly used worldwide. To conclude,patent races is the main challenges faced by innovative companies today which help to encourage innovation but it involves a lot money in the R&D process. Show less Reply Marie Georges 7 October 2015 As competition can have a positive effect on the firms’ incentive to innovate, patent races are designed to motivate agents and encourage them to innovate more than their competitors in order to become the first to obtain a patent. For example, as the article on Optimal Rules for Patent Races says, “airplane producers compete to build new military planes which…Read moreAs competition can have a positive effect on the firms’ incentive to innovate, patent races are designed to motivate agents and encourage them to innovate more than their competitors in order to become the first to obtain a patent. For example, as the article on Optimal Rules for Patent Races says, “airplane producers compete to build new military planes which meet Department of Defense specifications” (1). In that case and most of the patent races, firms compete for a prize and there is going to be a looser and a winner. On the other hand, these patent races can create a loss caused by the duplication effort. As each research activity is conducted independently, each firm often precedes down near-identical research efforts and this ends in wasteful patent races. Some contradicts this view saying that “the benefits accruing from diverse efforts at innovation may outweigh the waste involved in competitive innovation”, as in the Report of the Federal Trade Commission (2). Indeed, as competition has a positive effect on innovation, even if some value is wasted in the duplication of efforts, the final result may generate even more value than the time and resources consumed in the patent race process. But does firms have to spend more or less resources in this process? Do their competitors are going to invest more? Game theory illustrates well this dilemma. Obtaining better results than the competitor, knowing that he does the same, can lead to a complex choice in the allocation of resources in R&D. The design of the patent plays an important role to know what the better allocation is. More specifically, an important element of patent policy design is the time at which a patent is awarded to a firm. Is it more optimal to award a patent after the complete R&D process and create long patent races; or to let firms expend a lot of money in R&D after they receive a patent and create short patent races? Drug firms are a good example for the last proposition; indeed, they can patent a drug before they have proven its safety and efficacy (2). However, a short race may reduce the resources allocated in R&D at the second stage, letting firms working more slowly to finish R&D process and reduce their investments efforts. On the other hand, even if the long patent race option is more effective in terms of innovation; this creates a bigger wasteful duplicative effort caused by the fact that each firm invests resources in the same process for a longer period. After all, are these patents effective in all industries in order to encourage firms to innovate? After some researches, we can say that some firms don’t innovate to gain patent protection, but first to obtain learning curve advantages, first mover advantages and so on. Examples of industries concerned are office equipment, motor vehicles, rubber, and textiles (2). Another concrete example is Lotus, which focuses on the unique taste of its products to be better than its competitors and doesn’t fear to be copied (3). Other industries believe that patents are essentials to develop most of their inventions, like pharmaceuticals and chemicals industries. Until now, we have focuses on oligopolies markets where the competition increases innovation. But regarding monopolies situations where there are low barriers to entry, we can find out that innovation can even be more valuable when a monopolist is threatened by new entrants. Indeed, as it is said in the Report of the Federal Trade Commission, he “has more to lose than any potential entrant has to gain and will therefore invest more in innovation” (2). This leads in an innovation process that is more valuable because there are no wasteful duplication efforts and the incentive to innovate is very high. We can therefore conclude that competition creates a positive effect on innovation, but that depends on the industry concerned, the patent design and the market situation. SOURCES (1) Kenneth L. Judd, Karl Schmedders, Sevin Yeltekin, “Optimal rules for patent races”, https://www.kellogg.northwestern.edu/research/math/papers/1343.pdf, 2002, consulted the 4th october 2015. (2) Report by the Federal Trade Commission, “To promote innovation”, https://www.ftc.gov/sites/default/files/documents/reports/promote-innovation-proper-balance-competition-and-patent-law-and-policy/innovationrpt.pdf, 2003, consulted the 4th october 2015. (3) Trends-Tendances, « Lotus renonce au brevet pour la pâte de spéculoos », http://trends.levif.be/economie/entreprises/lotus-renonce-au-brevet-pour-la-pate-de-speculoos/article-normal-201003.html, 2011, consulted the 4th october 2015. Show less Reply Diana Munster 7 October 2015 The article deals with the pros and cons of patent wars from a company perspective but it does not explain what are the concrete impacts of a patent war on the customers. Indeed, the relevance of such a legal system can be questioned from a customer point of view. The widespread belief is that a patent system spurs innovation, as firms…Read moreThe article deals with the pros and cons of patent wars from a company perspective but it does not explain what are the concrete impacts of a patent war on the customers. Indeed, the relevance of such a legal system can be questioned from a customer point of view. The widespread belief is that a patent system spurs innovation, as firms are likely to engage in a fierce competition to be the first one to successfully file a patent. It is true that, in such a situation, companies are expected to invest massively in their Research & Development activities to be at the forefront of innovation. Consumers and the society as whole will therefore benefit from cutting edge technology. In this respect, it can be assumed that competition and patent wars support innovation. However, by seeking to be the first firm on the market and aiming to offer a state-of-the-art product or technology to consumers, companies can transform themselves into a pattern troll. This phenomenon has harmful impacts on big businesses and affects the citizens’ daily life. Nowadays, every product is covered by patents. By way of example, more than 250,000 patents cover smartphones, and Wifi routers have tons of patents associated . Some companies benefit from this situation as it prevents them from competition. To do so, they sympathetically insert abusive patents in the process or in the product. The very first impact for the consumer appears at this stage as costs of abusive patent’s assertion in a product are recouped in the selling price. Due to the large and abusive number of patents by product, it seems rather difficult for a company to refrain itself of infringing patents. In order to save their competitiveness, the enterprise can decide to pay a licensing fee. Moreover, it can be assumed that the company will have to pay the cost of lawsuits. As a consequence, costs will be either charged over the consumers as the selling price will increase, or the company will soak up the given costs . In a nutshell, when competing for patents, companies are likely to loose precious time and money as they might cope with higher costs, which could also give rise to employment restriction . More importantly, the quality of patents can also be questioned. With intent to be the first one on the market, companies rush to protect themselves from competition via patents. The patent is therefore not always well elaborated. Needless to mention that in such a situation, the first ones who will hold the bag are the consumers, as they will enjoy a low quality product . Besides, innovation is not fostered at all. About Innovation, patent war also hampers consumers from new technology . Indeed, when a company protects its products with patents, other competitors cannot offer more sophisticated and diversified goods. As a consequence, there are fewer products on the market. A key example is the Apple and Samsung case. These leader brands were in an unprecedented battle regarding the infringement of technology patents used in their products, namely smartphones and tablet devices. According to Vincent Lotempio, any company that faces such a situation has three options: “Discontinue the product in the applicable jurisdiction. Pay a licensing fee to the patent owner and to continue to sell the product. Create a new model of the product which no longer infringes on the patent in question” . The two companies finally decided to drop patent infringement procedure because of the significance of both costs and consequences (blocked markets, unwilling to lose market shares, the costs,…). As a conclusion, I share the view of Bartees Cox. We deeply need a comprehensive legislation, which encourages innovation, decreases abuse and paves the way for more affordable technology . It is worth noticing that, as underlined in the present article, patents can generate a wasteful duplication of efforts. I recently heard about a new way of stimulating innovation. This new trend tends to, inter alia, play down the wasteful duplication effort. This new technique, called “open innovation”, consists in innovating with its competitors in order to reduce costs, investments and share knowledge. What a good topic for a master thesis! Bibliography: COX, B. (2014). Consumers need protection from patent trolls. The Hill. Online http://thehill.com/blogs/congress-blog/judicial/202688-consumers-need-protection-from-patent-trolls. See on 6th October 2015. LOTEMPIO, V. (2013). The impact oof the Apple-Samsung patent wars. The Manzella report. Online: http://www.manzellareport.com/index.php/manufacturing/700-the-impact-of-the-apple-samsung-patent-wars. See on 5th October 2015. PARKER, T. (2011). Patent wars and their effect on your wallet. Investopedia. Online: http://www.investopedia.com/financial-edge/0811/patent-wars-and-their-effect-on-your-wallet.aspx. See on 5th October 2015 Show less Reply Emilie Collard 7 October 2015 In this post I will argue why, in my opinion, the patent race is not always a good thing for firms. Firms racing for patents are firms competing to be the first making a discovery or inventing something new and then they compete to be the first patenting it. First, there are many examples that show that being the first…Read moreIn this post I will argue why, in my opinion, the patent race is not always a good thing for firms. Firms racing for patents are firms competing to be the first making a discovery or inventing something new and then they compete to be the first patenting it. First, there are many examples that show that being the first is not always a sign of succes, Charles Darwin was not the first one to talk about the Theory of Evolution, but he is the one to whom the discovery is attributed. You can be the first to discover something but not being convincing enough to make the others, the consumers, adopt your innovation. You need to be convinced and convincing. How to convince the others that it is worth changing for your innovation? First of all, your innovation needs to present some relative advantages, if it is not the case, why would the others change their habits. After that, you need to manage four aspects so that the others will adopt your innovation. First of all, your innovation needs to be compatible. It means that your innovation has to be consistent, not disrupting, it can not be a huge change in the habits of the consumers. Also, your innovation can not be too complex, otherwise nobody is going to adopt it. Then, your innovation has to be testable, you have to let the consumers try the new product, the new service that you are offering so that they can make up their minds. And last but not least, your innovation has to be observable, it means that if you adopt an innovation, it has to be visible to others. To cut a long story short, if you want to convince people to change, make your innovation easy to adopt. If your innovation is not convincing enough, what would be the point of competing against others to patent it? Second, it is rare that an innovation is a brand new thing. Usually, innovations are combinations of things/innovations that already exist. If those innovations have all been patented, then at some point, we won’t be able to make new discoveries or to invent new things. Finally, firms competing in a patent race are pooling a lot of investments in Research & Development so they can be the first pantenting the innovation. We will face a lot of wasted investments in research & development due to the fact that the only firm who will benefit from the investment is the one who will patent the innovation first. I think that we should prevent this waste of investment by according to a restricted number of firms the right to work on a specific idea. this idea may seem quite utopian, but in this time of crisis, I think companies should not be allowed to make such expenditures knowing that there is only one of them who will benefit from it. I will conclude by saying that even though I have pinpointed the “cons” of the patent race, the two opposites effects that it brings make this situation quite complex to analyse. Sources : – Gailly, B. (2010) Developing Innovative Organizations, Palgrave Macmillan – https://www.innovationpolicyplatform.org/content/patent-races Show less Reply Lehmann Pierre 7 October 2015 By asking the question of the pros and cons of the patent races, we also ask the question of what degree of competition within an industry leads to optimal performance. Firms compete to introduce the innovation that can be modelled as a noncooperative game. Some conclusion can on this basis be taken. The first one is that the number of…Read moreBy asking the question of the pros and cons of the patent races, we also ask the question of what degree of competition within an industry leads to optimal performance. Firms compete to introduce the innovation that can be modelled as a noncooperative game. Some conclusion can on this basis be taken. The first one is that the number of industries on the market has an influence on the firm investment that will decrease if the number of industries increases. Another conclusion is that with a fixed market structure, the investments in R&D will exceed the social optimal. But patent races are still heavily linked with innovation, in this optic you have to distinguish two kinds of patent races: there are the standard races, all the firms invest in R&D and only the one finding the innovation obtain a patent and there are the asymmetrical races in which the incumbent firm wants to avoid competition by maintaining its monopoly on the market by obtaining patents before any other firms. In standard patent races, the investments in R&D are often higher and this kind of races speeds up the invention process. But as it is said before, a lot of investment will be lost for the firms that never obtained a patent. This money could have been use in another department. This is why those standard patent races are not always seen as healthy from a social perspective. The other big disadvantage is that, as there is competition between firms, they are less disposed to share information. For the asymmetrical patent race, the main problem is that the leader of the market does not always want to exploit the patent once he wins it. In order to prevent firms to win a patent they can use sleeping patents for a while. As we can see on the drug firms, you have a lot more power when you are the first one to obtain a patent. In this industry, you can even patent a drug before it is proven that it will be safe and efficient for the consumer. The patent race permit to innovate a lot but it is obviously not the best way to do if you want to maximise the social welfare of the industry and of the customers. Harris, C. and Vickers, J., (1985), Patent Races and the Persistence of Monopoly, The Journal of Industrial Economics, Vol.33, No.4, pp. 461-481. Judd, K., Schmedders, K. and Yeltekin, Sevin, (2012), Optimal Rules for Patent Races, International Economic Review, Vol.53, No.1, pp. 23-52. Lee, T. and Wilde, L., (1980), Market Structure and Innovation: A Reformulation, The Quarterly Journal of Economics, Vol.94, No.2, pp. 429-436. Loury, G., (1979), Market Structure and Innovation, The Quarterly Journal of Economics, Vol. 93, No.3, pp. 395-410. https://www.innovationpolicyplatform.org/content/patent-races, consulted on 07 October Show less Reply Erica Canzani 7 October 2015 A very current example of patent race could be that of self-driving cars. Self-driving cars are related to the idea of cars that are capable of driving themselves with no human intervention. The first attempt to approach this new world was made in 1920 by the company Houdina Radio Control that demonstrated the possibility to control a car with a…Read moreA very current example of patent race could be that of self-driving cars. Self-driving cars are related to the idea of cars that are capable of driving themselves with no human intervention. The first attempt to approach this new world was made in 1920 by the company Houdina Radio Control that demonstrated the possibility to control a car with a radio. The name of the car of the experiment was “Linnrican Wonder”. Since then, many progresses have been made in the automotive industry and today many important firms are involved in a real race to patent with the intent to secure a dominant position in the world of self-driving cars. According to the research made by HL Analytics, the patent activity in this field is four-fold increased from 2011 and the major countries involved are United States, for the largest part, Japan, Germany, United Kingdom and France. Moreover, concerning the companies that are filing the highest number of patents, we can find Google, followed by GM Global, Honda, Daimler AG, Bosch GmbH, Hyundai and IBM. In May 2011 Google won a patent for driverless technology called: “Transitioning a mixed-mode vehicle to autonomous mode”. Google invested a lot in R&D for this project such that the forces behind its patents were some of the best researchers and scientists in the world of technology. Despite Google winning the first important patent in this race for self-driving cars, in my opinion this is not a case of a “winner-takes-all” market. Indeed it is still possible for other companies to develop their own self-driving vehicles with their own technology; moreover Google’s patents are related, in most of the cases, only to software technology while there is lack of patents relating to core vehicles hardware. As a result, Google’s technology was tested on Toyota and Audi models. Therefore a lot of opportunities within the market of self-driving cars are still open to other companies for new possible inventions. In this sense, Apple is a clear example. In recent years, the Cupertino-based company has developed a lot of technologies connected to the vehicle network system, such as a mobile device that can identify the location of a vehicle in a low signal environment or a touchscreen interface for vehicle. This demonstrates that the market of autonomous vehicles could also possibly generate joint-ventures or cross-licensing deals. Finally, I believe that the first reason behind such patent races is the possibility for the firm to reach a predominant position in the market and therefore outperform its rivals. This kind of investments, however, are likely to generate, in most of the cases, an overall direct benefit to the whole society. Indeed, it has been proved that robots can perform better than humans, which could reduce substantially the number of road accidents. References: http://www.bbc.com/news/technology-16197664 http://www.tomsguide.com/us/google-driverless-car-patent-uspto,news-15889.html http://phys.org/news/2011-12-google-patent-driverless-car-technology.html http://patentvue.com/2015/08/17/apple-may-acquire-patents-for-autonomous-car-technology/ http://www.haseltinelake.com/media/351145/haseltine_lake_ip_analytics_newsletter_winter_2014.pdf Show less Reply Delphine Struyf 6 October 2015 First of all, I wanted to underline the fact that being the first to invent and patent something isn't a sufficient condition to the success of an innovation. Indeed, it has to be accepted by the customers. This means that the “Patent Race” has to be a race about products that that increase the perceived value for the customers. Therefore,…Read moreFirst of all, I wanted to underline the fact that being the first to invent and patent something isn’t a sufficient condition to the success of an innovation. Indeed, it has to be accepted by the customers. This means that the “Patent Race” has to be a race about products that that increase the perceived value for the customers. Therefore, an innovation should have the following features. First, it has to be testable: if customers have the opportunity to try the product, they will more easily see the benefits of it. Second, the innovation has to be observable: if I see others adopted a new product and that they trust this product, I’ll be more tempted to buy the product. Third, the innovation has to be easy: if there’s too much to learn before using the innovation effectively, people would rather keep the old product. Finally, it has to be compatible: an innovation that doesn’t disrupt routines is more likely to be adopted than a disruptive one (Schumpeter called this the creative disruption of innovations). These factors influence the time of adoption and the longer the adoption time, the riskier the innovation because of uncertainty. Then, the innovator also has to convince stakeholders. The latter have too perceive the value of the newness. Thus, even if an innovation is patented, we see here that its success doesn’t depend only on the market structure or on being the first one in the race. A competitor could invent something that is more testable, easier to use, more compatible and more observable than our patented innovation. His new product or process will succeed better than ours. An example of domain where the patent race is really present is the online retails shops. I think for instance about Amazon. The company has lots of patents on new technologies that aim a real online experience for customers and make their life easier (they also have plenty of other patents but I won’t focus on these here). They have for instance a patent called “Gaze-Based Content Display”, in which they found a way to highlight elements of a web page that customers want to see, in function of which part of the screen they look at. An other example is the innovation patented under the name “System for Enabling Electronic Catalog Users to Create and Share Research Data”. This patent protects an innovation that permits feedback on the products people buy and try. There’s also a protected innovation that allows to look for items that have positive feedback. All these examples of patents, among others, allow Amazon to offer a unique online shopping experience, and to remain a leader in this domain. (source: http://www.ipwatchdog.com/2014/03/08/amazon-patents-focus-on-online-shopping-experience/id=48342/ ) In this case, I would say that competition in the raising online shopping market fosters innovation. Think about Zalando or other retailers that launch a business online. If Amazon doesn’t innovate and protect its innovations, it’s likely that they quickly won’t be a leader any more. But we didn’t get there yet. Show less Reply Romain De Becker 6 October 2015 After reading the text I think the government should try to avoid the “wasteful duplication of efforts”. Maybe the government should implement a law that allows firms to have “the exclusivity for an idea” in return of a payment. It will avoid the waste of resources in developing the same idea as the competitor. If the firms are sure to…Read moreAfter reading the text I think the government should try to avoid the “wasteful duplication of efforts”. Maybe the government should implement a law that allows firms to have “the exclusivity for an idea” in return of a payment. It will avoid the waste of resources in developing the same idea as the competitor. If the firms are sure to have benefits by investing in R&D, it will boost the innovation growth in the industry. For example in the pharmaceutical sector, if each firm focus on a specific “disease” without losing time and resources, it will increase the productivity of the sector. Unfortunately I think it could lead to a “race of idea”, where the firms could pay for the exclusivity of an idea in order to block the competitors. The new law should be very controlled (with penalty, fine, ect..) in order to be sure that the idea is really developed by the firm. The second point I want to develop is about the “patent trolls”, there are more and more little patents generated by firms in order to block the competitors (and then sold very expensive). Maybe when the innovation is judged not enough “huge” by the government, a new patent couldn’t be created. But if the innovation contributes to the social welfare of the economy, the firm could earn an amount of money equal to the social contribution. But in a society where the competition is very hard, it could be very difficult to implement. Show less Reply Nathan Lassance 5 October 2015 The impact of patent races on welfare creation are, theoretically, hard to assess. On the one hand, as explained by Lévêque and Ménière (2004), “the “winner takes it all” situation triggers patent races, with the result that the future value of an innovation is squandered on R&D investments.” In order words, when there is no limit on the number of…Read moreThe impact of patent races on welfare creation are, theoretically, hard to assess. On the one hand, as explained by Lévêque and Ménière (2004), “the “winner takes it all” situation triggers patent races, with the result that the future value of an innovation is squandered on R&D investments.” In order words, when there is no limit on the number of firms that can enter into the race, the number of firms tends to be larger than the social optimum. There happens what is called a wasteful duplication of R&D efforts. The same authors also explain that, even when the race isn’t freely accessible (because of a lack of knowledge or if the industry has a small number of players), this problem of excessive investment still occurs because the players tend to make stronger efforts. On the other hand, as explained on The Innovation Policy Platform , “the competitive element in standard patent races can be positive in speeding up invention processes.” More firms means more chances of finding the right technology and ultimately this gives customers access to new technologies. Also, the duplication of R&D efforts does not always take place: “results may ultimately lead to different products or to the quicker identification of solutions than in the absence of competition in research efforts.” We can expect that the latter assertion holds true in industries where the products are rather heterogeneous or when multiple solutions exists to reach a certain objective. As it is quite often the case when we want to analyse the ins and outs of an economic issue that has no clear-cut answer, the theory cannot put a final word on the issue and empirical analysis is necessary to understand how different environments may lead to different answers. The case I have decided to cover is quite specific but still, in my opinion, very insightful. It concerns two companies: Medtronic and Edwards Lifesciences. Both companies make their business in a very specific market: they provide medical technology for the interventional and surgical treatment of cardiovascular disease. Recently, they have been competing for obtaining an exclusive patent on their transcatheter aortic valve replacement (TAVR) product. In this race, it is Edwards who won by being the first to place a patent on its Sapien transcatheter heart valve. However, the race didn’t stop there: the winner didn’t take it all. Medtronic finally launched its own TAVR in 2014, named CoreValve. As one might have expected, Edwards didn’t stand around doing nothing. Edwards sued Medtronic on having infringed on one of its patents. Medtronic counterattacked Edwards by stating that “CoreValve system is a safer device and that patients in whom it is implanted have better outcomes with a lower risk of death. Edwards’ competing device cannot serve individuals with aortic annuli larger than 25 mm, leaving some patients without a viable treatment option.”  In other words, even though CoreValve is in many aspects resembling to Edwards’ device, it covers more specifications and thus deserves to be available on the market. In May 2014, the two companies reached a global patent settlement agreement in which Medtronic had to pay a fixed fee of $750 million as well as royalty payments until April 2022. Both parties have also agreed that “neither party will sue the other for patent matters anywhere in the world for eight years in the field of aortic and all other transcatheter heart valves.”  To conclude, what does this example teach us about patent races? First, even if you lose the patent race, you can still survive. All your R&D investments are not lost if your product is somewhat differentiated from the winner’s one: wasteful duplication does not always happen. Medtronic has been able to survive the race and to propose its device to the world. Second, in very specialized races, not everyone can participate and less wasteful efforts take place. In this example, only two companies participated in the race, hence minimizing the social cost of the patent competition. Third, patent races, when they result in different products or solutions, are very beneficial as they speed up the appearance of several technologies covering needs that are somewhat different. In this case, doctors and patients can enjoy two different solutions covering not exactly the same situations. Finally, being the first one can be beneficial even if you don’t stay alone at the end of the race. Indeed, you can fill a patent first and try to reap the profit of the rivals by suing them into court, what Edwards has done. References:  Lévêque, F., & Ménière, Y. (2004). The Economics of Patents and Copyright. Berkeley Electronic Press.  The Innovation Policy Platform. Patent races. https://www.innovationpolicyplatform.org/content/patent-races  Wasserman, E. (2014). Medtronic and Edwards Lifesciences settle the score in ongoing patent feud. http://www.fiercemedicaldevices.com/story/medtronic-and-edwards-lifesciences-settle-score-ongoing-patent-feud/2014-05-20  Husten, L. (2014). Medtronic To Pay Over $1Billion To Settle Patent Litigation With Edwards Lifesciences. http://www.forbes.com/sites/larryhusten/2014/05/20/medtronic-to-pay-over-1billion-to-settle-patent-litigation-with-edwards-lifesciences/  Medtronic. (2014). Medtronic Settles Global Patent Litigation with Edwards Lifesciences. http://newsroom.medtronic.com/phoenix.zhtml?c=251324&p=irol-newsArticle&ID=1932573&highlight=  Parmar, A. (2014). Edwards Lifesciences CEO: Medtronic Not As Aggressive in Early Launch of CoreValve. http://www.mddionline.com/article/edwards-ceo-medtronic-not-aggressive-early-launch-corevalve-73014 Show less Reply Alberto Fragapane 5 October 2015 I think that a situation that could resemble a patent race is a topic that everybody knows, because we have studied it during the school. I'm dealing with the famous "Space race" between USA and URSS, during the Cold War. We have two "firms", in this case Nations, that compete for reaching the supremacy in spaceflight capability. Obviously in the context…Read moreI think that a situation that could resemble a patent race is a topic that everybody knows, because we have studied it during the school. I’m dealing with the famous “Space race” between USA and URSS, during the Cold War. We have two “firms”, in this case Nations, that compete for reaching the supremacy in spaceflight capability. Obviously in the context of those years, spaceflight capability was not exactly the only goal of this competition, but their continue strength trial led to a great innovation in this field. “The Space Race has left a legacy of Earth communications and weather satellites, and continuing human space presence on the International Space Station. It has also sparked increases in spending on education and research and development, which led to beneficial spin-off technologies.” (“Wikipedia”) Also this special race led to the generation of wasteful duplication of effort, such that in 1963, after an improvement in the relationship between US and URSS, John F. Kennedy, during a speech in the United Nations, proposed a cooperation between these two “firms”, in order to organize a mission to the moon. This attempt of create a “merger” in this “industry” was stopped by his killing, just two months later, but some authors sustained that there wasn’t only political reason under his proposal, but also economical ones. This kind of program was too costly also for the USA’s economy, and specially the opponents of the program stressed the high costs of the proposed trip to the moon, estimated at more than $20 billion. Nikita Khrushchev had initially rejected Kennedy’s proposal, so probably also without Kennedy’s death we wouldn’t have seen his project realized. At the end of this story USA managed to be the first Nation to land a man on the moon, and URSS paid the economical consequence of this race. In fact many commentors sustaines that one of the causes of URSS’ collapse was the bad economic situation, worsen by the exaggerated expenditure due to the space race. Therefore maybe Kennedy’s proposal wasn’t so bad and maybe this famous story can be a useful lesson for some specific contemporary firms. References: – Wikipedia – http://www.history.com/this-day-in-history/kennedy-proposes-joint-mission-to-the-moon Show less Reply Bostyn Sophie 5 October 2015 According to Joseph Zeira, patent races appear when 2 conditions are met: the potential innovations differ in costs and innovations are searched simultaneously. They also add the concept of duplication of innovative activity that is a consequence of patent races. Duplication can explain the reduction of the effect of scale on growth, which is Pareto-inefficient. Moreover, when there is…Read moreAccording to Joseph Zeira, patent races appear when 2 conditions are met: the potential innovations differ in costs and innovations are searched simultaneously. They also add the concept of duplication of innovative activity that is a consequence of patent races. Duplication can explain the reduction of the effect of scale on growth, which is Pareto-inefficient. Moreover, when there is risk aversion and that the patent is very risky, it can lead to insurance effects which consist of risk sharing through capital venture or increase the number of team for research. The aim of this is well to be the first to find the innovation. However, as a result, it involves more R&D but lower growth rates. Another finding is that the emergence of patent races can occur when the cost of innovation is low, which leads to more research team and thus a higher return for the low probability of success. It’s also highlighted that there are more research in low cost innovation despite high cost innovation are under-researched. http://search.proquest.com.proxy.bib.ucl.ac.be:8888/abicomplete/docview/867331953/5AF5ADCD71D0454BPQ/4?accountid=12156 One of the positive points of patent races is that it increases the chances of the innovation’ findings, due to the fact that more than one team work on the same innovation rather than on another. However, it can involve that there is no diversification in research areas and it represents few innovation for loads of researches. An element that I would like to emphasize is that according to Arrow and Schumpeter’s theory an optimal market structure should result in dynamic competition driven by the goal of achieving a monopoly. In fact, both monopoly and perfect competition markets individually would not lead to innovation incentives. However, they have both their strengths to create innovation. Big firms have the capacity to finance R&D costs but could suffer from no innovation incentives as the competition is weak. So I completely agree that companies in a competitive environment where the monopoly is achievable are willing to invest in R&D to attempt that position and beneficiate of patents to have return on their investments. The complexity of this solution remains in the settings of the patterns (how many years, what is involved?). By the way, as said in Belleflamme’ courses, it’s also necessary to assess how the intensity of competition affects incentives to innovate. That is, we have to consider three variables: the number of firms, the degree of product differentiation, and the type of competition (price or quantity). One of the examples is pharmaceutical industry where patent races are ubiquitous. In that case, there must be equilibrium between competition and monopoly in the sense that competition is needed to lead to more innovation and monopoly is also needed because it represents the incentive for competitive firms to innovate. If there wasn’t patent, there would be less competition and so, less types of drugs for people, which would reduce the welfare of the population. But if there were too much patents leading to monopoly, drug’s price would be too high, which would also reduce the welfare because less people would be able to buy drugs. That’s why, it’ really important to set the characteristics of the patent like the duration, the breadth, the entry barriers … Show less Reply Coeck Chesley 5 October 2015 Nowadays, there exist a lot of firms on different market: computer, mobile phones, shoes etc. The competition within a market is so intensive; indeed, firms want to distinguish themselves by innovating new products. It implies that companies are implied in a “patent race”, pursuing the same goal. We will take the case of Nike and Adidas. Of course, there exists a…Read moreNowadays, there exist a lot of firms on different market: computer, mobile phones, shoes etc. The competition within a market is so intensive; indeed, firms want to distinguish themselves by innovating new products. It implies that companies are implied in a “patent race”, pursuing the same goal. We will take the case of Nike and Adidas. Of course, there exists a lot of other firms in the sportswear, but Adidas and Nike seem a better comparison because of their presence in a lot of sport competition like football, tennis etc. Both of them found their history in the early 1900 by providing to the athletes some sports gears, firstly in a local region. But year after year, both of them were very successful impacted by world cups, a higher incentive to do sport etc. We can see from the beginning that Nike and Adidas try to be state at the art. Indeed, for example, Nike and Adidas began both of them with leather football shoes, not so comfortable but winning the thrust of their client, they began a hard patent race. Trying to get more and more client and be as performance as possible, they looked for new raw material. By the development of the synthetic, the companies tried to reduce their cost but also to work with more “sustainable innovation” as said Mark Parker, the CEO of Nike. We can see that both of the firms try to be more respectful of the environment (does it really work, that is another question) and satisfy their clients who have today more and more expectations. In conclusion, we can see that innovation and the patent race is everywhere: as well in the technology with the phones, television, cars etc. as in the clothes, focusing more the production way that the final product. Nike and Adidas are (still) trying to get new (niche) market by innovating, filing patent in the hope to be the best, to satisfy client and to get a profit as higher as possible. References http://www.adidas-group.com/en/group/history/ http://xroads.virginia.edu/~class/am483_97/projects/hincker/nikhist.html http://news.nike.com/news/through-the-years-nike-s-history-of-sustainable-innovation–2 https://en.wikipedia.org/wiki/Synthetic_fiber Show less Reply Laureen de Barsy 4 October 2015 Before developing an example of patent race, I would like to add one element to the patent races effects cited in Professor Belleflamme’s post: the business stealing effect. This effect comes from the fact that the introduction of a new product will make older existing products obsolete, reducing incumbent firms’ profits. This loss in profits is not considered by the…Read moreBefore developing an example of patent race, I would like to add one element to the patent races effects cited in Professor Belleflamme’s post: the business stealing effect. This effect comes from the fact that the introduction of a new product will make older existing products obsolete, reducing incumbent firms’ profits. This loss in profits is not considered by the innovator in its decision to invest in R&D. Therefore, because of the business stealing effect, firms engaged in a patent race may invest too much compared to what is socially desirable. (Régibeau, 2004) Within the context of patent races, a situation of simultaneous invention can occur (Lemley, 2011). This is the case of Edison’s light bulb or Bell’s telephone. Since these two inventions have already been covered in other posts, I will focus on another famous case: the Wright Brothers’ airplane. In 1903, the Wright Flyer becomes the first machine capable of a controlled, sustained flight with a pilot aboard (“The Wright Brothers & The Invention of the Aerial Age”). A patent on its flight control is granted, which will be used by the American inventors, the Wright Brothers, to defeat all alternative aircrafts developed shortly after (Lemley, 2011). This led to a patent war that suppressed almost all aviation development in the U.S. until World War I (Boyne, 2008). As we can see, the litigious nature of an inventor can have the effect of stifling innovation, just as patent trolls (Belleflamme, 2011). Moreover, no invention comes from the void. In the airplane example, several aviation experts argue that the first contribution to the idea of a flying machine dates back at least to DaVinci, while the Wrights invented only a particular improvement to the knowledge available in 1899: “a way of warping a wing to control the direction of flight while turning a rear rudder to counterbalance the effect of bending the wing, maintaining the stability of the plane”. However, the patent granted to the Wright Brothers was much broader than this particular improvement (Lemley, 2011). These are two of the reasons why a patent has to be granted with caution, and its breadth carefully defined. References: “The Wright Brothers & The Invention of the Aerial Age”. National Air and Space Museum. Retrieved from http://airandspace.si.edu/exhibitions/wright-brothers/online/ Belleflamme, P. (2011) “What to think of ‘patent trolls’? The return”. Retrieved from http://www.ipdigit.eu/2011/10/what-to-think-of-patent-trolls-the-return/ Boyne, Walter J. (2008) “The Wright Brothers: The Other Side of the Coin”. Retrieved from http://www.wingsoverkansas.com/boyne/a268/ Lemley, Mark A. (2011) “The Myth of the Sole Inventor”. Stanford Public Law Working Paper No. 1856610. Régibeau, P. and K. Rocket (2004) “The Relationship between Intellectual Property Law and Competition Law: An Economic Approach”, University of Essex, Working Paper, 581. Show less Reply Mélodie Marchal 4 October 2015 Well which are the pros and the cons for patent race? It’s actually a good question and we have a lot of industry cases to illustrate them. The most obvious example is, in my sense, the medical research patenting. If you ask yourself about the pros we can found for the medical research patenting, we could first say, well, this practise…Read moreWell which are the pros and the cons for patent race? It’s actually a good question and we have a lot of industry cases to illustrate them. The most obvious example is, in my sense, the medical research patenting. If you ask yourself about the pros we can found for the medical research patenting, we could first say, well, this practise allow market competition. In fact, a medical treatment that could be created could make profits to the company that discovered it. This profit could encourage competition within the field because there could be huge profits to make if we can find how you can cure a big disease like cancer or Alzheimer …. A second point is that create profitability in an area generally not profitable. In fact, make generic copies of a treatment could be easily without patent. Of course, it would be beneficial for humanity but that doesn’t help your company budget to be balanced. But know which kind of consequences could come from medical research patenting? When you find a medical treatment, we first had to use genes or cells from a human structure. So actually it’s something natural, existing from centuries. So theorically putting patent on a treatment using something that already exist could go against the process of innovation that suppose creating something new. Own a patent could also freeze medical research. In fact, suppose a firm has a patent on a new medical treatment but discovered it could be not so profitable, comparing to what we’ve expected. So the firm could decide to sit on the patent and doing nothing. Other companies need to continue researches and wait still the expiration of the patent. A third possible consequence could be that firm with patents fixed higher price to benefit of the treatment or we’re stuck with your disease. That could exploit humanity for a better business. So to conclude, and not only for medical research, patent could be a good thing for firm to cover the cost of work, time and money spent on researches. It’s important to protect intellectual property. But in the other hand, some firm could profit of some aspects to exploit all possibilities of business. Patents need to be extremely well regulated. Show less Reply Fabian Bald 3 October 2015 The existence of patent races has spurred many economic models trying to explain how the market structure affects the amount of R&D spent. As patent race models are necessarily dynamic models and thus include several decision- making stages, they can be quite complex and small changes in assumptions may lead to even contradicting results( see for example Loury(1979) and Lee/…Read moreThe existence of patent races has spurred many economic models trying to explain how the market structure affects the amount of R&D spent. As patent race models are necessarily dynamic models and thus include several decision- making stages, they can be quite complex and small changes in assumptions may lead to even contradicting results( see for example Loury(1979) and Lee/ Wilde(1980) and their results regarding the Schumpeter hypothesis). Inherent to these models is the assumption that races for an innovation and a patent on it will exist in different industries, however they are not trying to explain under what circumstances races for patents will exist or if they are actually advantageous from a social perspective. The ambiguous effects of patent races can be best illustrated by the patent races for XPrizes (see http://www.xprize.org), whereby philanthropists or firms organize races for innovations. By strictly limiting the time of the races and providing a high prize for the winner (between 1 and 20 Million $), firms are incentivized to invest in areas which they would otherwise not have prioritized. This can accelerate and spur innovation, but will at the time redirect funds from projects where they could be spent more efficiently. Furthermore there might be wasteful duplication of R&D spending (compared to the case of Research Joint Ventures). The competing firms for a 10 million $US Xprize thus spent more than 29 million on R&D (see http://www.xprize.org ) Patent races are prominent in medical research. A real world example is the race of the two firms Edwards Lifesciences and Medtronic for a replacement valve which could substitute open-heart surgery. The “prize” for being the first firm to successfully file a patent could expect a market for the product which is worth up to $1, 5 billion. Operations with these replacement valves have already been successfully carried out in various European countries but had previously not been approved by the US American authorities, which makes this real life example very vivid as a huge part of the research has already been carried out. From the same starting point(the research of their European counterparts), the race of the two firm to get the use of these replacement valves approved can be observed nicely. (http://www.nytimes.com/2009/10/01/business/01valve.html?_r=0 ) https://www.innovationpolicyplatform.org/content/patent-races Show less Reply Wilberz Francois 3 October 2015 It can be clearly seen that the IT industry and the pharmaceutical firms are the businesses the most concerned by the patent race. In our case, we will mostly focus on the virtual reality race which can be defined as: “an artificial environment that is created with software and presented to the user in such a way that the user…Read moreIt can be clearly seen that the IT industry and the pharmaceutical firms are the businesses the most concerned by the patent race. In our case, we will mostly focus on the virtual reality race which can be defined as: “an artificial environment that is created with software and presented to the user in such a way that the user suspends belief and accepts it as a real environment” (1). Although we might think at first glance that this market is only dedicated to the video game industry, a new technological breakthrough in this technology might also lead to new durable applications in the military, education but also for different other businesses (2). Some forecasts predict that this technology could even represent more than a 4 billion of dollar market around 2018 (3) while it represented only 90 million of dollar in 2014. This can now better explained why some of the major IT companies as Facebook, Microsoft or Sony have started to heavily invest in this field (4) and have implicitly started a patent race to dominate the market. According to LexInnova, a consulting firm specialized in patent, Sony is taking the lead with 366 patents while Microsoft and Samsung complete the podium with respectively 365 and 348 patents. But it has not in counterpart prevented other players to developed interesting products as the Oculus Rift, produced by Facebook or the HTC Vive (5). In this case, the attractiveness of this new market has pushed several manufacturers to innovate to differentiate themselves from other competitors. The recent acquisition of Nimble VR, specialized in hand-tracking, by Oculus will procure a better gaming experience to the Oculus customer (6) while Sony works on a device which can be connected to its games console, the PlayStation 4 (7) . Those last examples demonstrates that the principle of the “winner-takes-all “cannot be apply in this particular industry, at least for the moment. Indeed, the surrounding environment allows the different competitors to find other alternatives to procure the best experiment possible to its customers. This can be partially explained by the different profiles and needs of the consumers. On the other hand, the same conclusion cannot be apply to the pharmaceutical industry. Indeed, as a drug responds to a specific need, it is harder for other firms to provide a large range of solutions to the same problem. The first company which will be able to patent a specific molecule, which can cured a disease, has the highest chance to commercialize the product in the coming years and to become a monopole. In this case, we can then say that this industry tends to face a “winner-takes-all” dilemma. As the impacts of a patent race fluctuate according to the industry, it might be interesting to consider the patent legislation following the industry in which he is emitted as stated in the text. In our case, we can see that the first example pushed the different players on the market to innovate even more to compete with other rivals and could lead to new applications. On the other hand, the pharmaceutical are confronted to the “winner-takes-all” dilemma when innovating and tend to make redundant the research of other firms once a patent have been emitted. This can then be a brake to those firm to innovate in one field while the other rivalry are working on the project for a long time. Sources: (1) http://whatis.techtarget.com/definition/virtual-reality (2) http://www.vrs.org.uk/virtual-reality-applications/index.html (3) http://www.forbes.com/sites/paullamkin/2015/06/18/virtual-reality-devices-4-billion-business-by-2018/ (4) http://www.ce.org/i3/Features/2014/July-August/The-Virtual-Reality-Race.aspx (5) http://www.tomsguide.com/us/htc-vive-specs-features,news-20526.html (6) https://virtualrealityreporter.com/investments-2014/ (7) http://www.huffingtonpost.fr/2015/09/21/playstation-vr-sony-casque-realite-virtuelle-ps4_n_8138428.html Show less Reply Gabrielle van Outryve 3 October 2015 One of the most important innovations this past couple years is 3D printing. This innovation is changing the way we live and work and has an enormous impact on the production chain of every industry. The applications of this technology are numerous and very diversified: from daily life accessories to medical equipment or even in the aerospace industry. But…Read moreOne of the most important innovations this past couple years is 3D printing. This innovation is changing the way we live and work and has an enormous impact on the production chain of every industry. The applications of this technology are numerous and very diversified: from daily life accessories to medical equipment or even in the aerospace industry. But this technology goes even further, as recent applications in the medical sector, such as the creation of artificial organs, pushes forward the use of this innovation at an incredibly high level. That is why it gains such interest from firms, and that a real patent race is going on. “The patents analysis shows that American players are central to innovation on the technologies of 3D printing. Between 1993 and 2011, they represent over 70% of patents. US companies indeed are the leader with two great actors, Stratasys and 3D Systems.” Both firms are trying to patent their improvements faster than their competitors, which lead to an extremely high number of granted patents. This raises the following question: By giving patents even on minor discoveries, aren’t we only focusing on economic profitability? What about the other aspects of creation? Elon Musk, CEO of Tesla Motors is a proponent of this vision: “If a company is truly relying on patents it means they aren’t innovating, or not innovating fast enough… Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers” Giving the opportunity to use other people’s findings is in the alignment with a much broader vision. Instead of killing innovation by an excess of patents, being open-minded and sharing knowledge is way more interesting for social well-being. It may be time for firms to change their way of thinking and to transform patent races into welfare races. Moreover, we should think about shorter lifetime patents. This could discourage unnecessary patent filings and allow other companies to innovate based on the detailed patent accounts only several years after filing, but still giving the patent filer an advantage of having a certain monopoly on his findings – he did, after all, work hard to have it. Sources http://www.industrie-techno.com/l-impression-3d-vue-au-prisme-des-depots-de-brevets.36223 http://www.wsj.com/articles/tesla-motors-says-it-will-allow-others-to-use-its-patents-1402594375 http://www.usatoday.com/story/money/cars/2014/06/12/tesla-patents-drop/10374433/ Show less Reply Aurélia Job 11 November 2014 The Medical Technology (MedTech) industry is affected by patent race like neighboring pharma & tech industries. Medical Technology industry refers to "any technology used to save lives in individuals suffering from a wide range of conditions"(1) from low technology tools such as latex gloves to high tech ones, in this instance artificial hearts. Artificial hearts are subject to R&D since 1949(2).…Read moreThe Medical Technology (MedTech) industry is affected by patent race like neighboring pharma & tech industries. Medical Technology industry refers to “any technology used to save lives in individuals suffering from a wide range of conditions”(1) from low technology tools such as latex gloves to high tech ones, in this instance artificial hearts. Artificial hearts are subject to R&D since 1949(2). The purpose of artificial hearts is to replace) the biological heart of a patient temporarily (in case of open-heart surgery) or permanently (where there is no donor and a vital and urgent need for a heart transplantation). We will build our example from the latter case. Every year, “more than 100 000 patients are waiting for a heart transplantation whereas less than 4 000 hearts are available”(3) according to Carmat, a medical technology company that successfully implanted a patented bioprosthetic heart in a second patient earlier this semester. Carmat has developed a bioprosthetic heart from the expertize of Prof. Alain Carpentier, MD, specialized in heart surgery, venture capital firm Truffle Capital and biomedical company Matra Defense. The specificity of this artificial heart arises from the material used. The selling price has been set between 140 000 and 180 000 EUR. As mentioned earlier in this post, the potential market for artificial heart exceeds 96 000 patients and there is a huge “first-to-invent” competition for the prize of a temporary monopolistic position relayed by free media advertisement. Other companies are looking for cutting edge discoveries to make the perfect bioprosthetic heart that would be the just-as-perfect replica of an ideal human heart. Very active companies such as Frazier-Crohn who has filled over 1 000 patents (4) and Syncardia with its 85 patents(5) can be mentioned, to name a few. That being said, Prof. Alain Carpenter, MD, already received an Albert Lasker prize for his medical research in 2007, which did not prevent him to later apply for a patent for the commercial application of his invention in 2007(6). This draws the question of whether prizes might be reward enough to ensure efficient innovation, which might make patents at least partially redundant. More broadly, can life-saving be legitimately restricted? This is an ethical question that the legislator will have to address one way or another, taking into account the long-term effects it might have on the rewards of innovation, and thus on future innovation and in turn on saving more lives in the long-term. Source: (1) http://www.eucomed.be/medical-technology (2) Davies, M K. “History of Cardiac Surgery.” Heart (2002): 509. Print. (3) http://online.wsj.com/articles/carmat-implants-artificial-heart-in-a-second-patient-1410176132 (4) https://www.google.com/?tbm=pts&gws_rd=ssl#tbm=pts&q=Frazier-Cohn (5) https://www.google.com/?tbm=pts&gws_rd=ssl#tbm=pts&q=syncardia (6) https://www.google.com/patents/WO2008145870A3?cl=fr&dq=alain+carpentier&hl=fr&sa=X&ei=9otiVJ7GKcviO4fwgJgP&sqi=2&pjf=1&ved=0CCUQ6AEwAQ NB: Following this previous post , patent race may also have adverse effects on patients. In the attempt to be the first, R&D teams may be sorely tempted to test and/or release medical technology too early. One may wonder, for instance, if the decision to implant a patient with the Carmat prototype at the end of 2013 was indeed in the patient’s best interest. A few weeks after implantation, he suffered an “electronic heart attack” apparently do to a short-circuit phenomenon, and could not be revived.(1) Source: (1) http://www.lemonde.fr/sante/article/2014/03/03/mort-du-malade-ayant-beneficie-de-la-premiere-implantation-d-un-c-ur-artificiel-carmat_4376988_1651302.html Show less Reply Mayank Singhal 11 November 2014 I believe that the pros and cons of a patent race largely depend upon the type of industry in question and also whether we are looking at the problem from the viewpoint of the competitors or the industry as a whole. Addressing the first part, I would take the examples of the utilitarian industries - say fashion industry(loosely apparels). This is…Read moreI believe that the pros and cons of a patent race largely depend upon the type of industry in question and also whether we are looking at the problem from the viewpoint of the competitors or the industry as a whole. Addressing the first part, I would take the examples of the utilitarian industries – say fashion industry(loosely apparels). This is an industry which has some trademark protection but hardly any patent protection. In the U.S(its biggest market), there is no law to file for a patent for a particular design. A similar case exists in Japan(3rd biggest market) where for filing patents , you need to prove the absolute uniqueness of the design which is very difficult. In the E.U, however, the patent laws are so fragile that any new design can be patented( a Gucci gown could be made an inch longer and a patent may be obtained) – leading to no one bothering too much about patents and the related lawsuits. However, this lack of a patent environment hasnt really hampered innovation in this industry. 1. You find new designers ripping off the designs of the old established designers, making subtle changes and starting new lines. Its almost like building on the foundations laid by others. 2. There are folks involved in the counterfeit products business where original Pradas, Nikes’ design are ripped off and cheap versions are made. This however, doesnt deter the original producers, as the customer segments for both the counterfeit and the original are very different. 3. Also, this lack of protection spurs the innovators to innovate in a manner that cannot be easily and economically replicated- be it with the technical acumen required(Stuart Weitzman’s metallic flat wedge sandals) or with the aesthetics involved. Thus, fashion as an industry hardly faces an issue despite relying heavily upon creativity and extremely short innovation cycles. So we face this question- Is patent race the biggest motivator behind innovation. Such a situation exists not just in fashion but also in food(its another thing that KFC doesnt reveal its secret recipe but you are free to copy it if you can) and to a certain extent automobiles design. If you look at software, the Open Source Software sees thousands of applications being written on a daily basis.On the other hand, we have the cinema industry (comparatively smaller in revenue size as compared to these utilitarian behemoths) seeing lawsuits being filed day in and out over patent infringement. In conclusion, I would like to reiterate the fact that Patent race is a sort of innovation by force, whereas I guess, real innovation is inspired by creativity and need. I guess, for some industries, this may not be true(specifically the pharmaceutical sector) where the research involved is time-consuming and involves a lot of resources and hence, the desire to earn money by the winner in the race is understandable. But in this case,let us not forget that we are considering a microscopic view of the industry. Taking a macroscopic view, the industry as a whole suffers whenever there is a zerosum game in action. As Lennon would say – “Imagine there is no Patents!!!!” Show less Reply Copay 11 November 2014 The patent race I choose concerns graphene. This is a crystal composed of a layer of carbon atoms and directly derived from graphite - mines pencils. Since the work of two scientists to isolate graphite in 2004 and their Nobel Prize in 2010, graphite development and application increased extraordinary. This is due to precious characteristics of the product such as…Read moreThe patent race I choose concerns graphene. This is a crystal composed of a layer of carbon atoms and directly derived from graphite – mines pencils. Since the work of two scientists to isolate graphite in 2004 and their Nobel Prize in 2010, graphite development and application increased extraordinary. This is due to precious characteristics of the product such as more conductive than copper, passing signals faster than silicon, 97% transparent and flexible. The characteristics are highly valuable for lots of different area. Some scientists predict that sraphene is the same sort of material, like steel or plastic or silicon that have the potential for changing society. The patent race concerns firms and universities, rushing to understand, patent and profit form graphene. Among individual corporate and academic graphene developers, the top three global patent owners are: IBM, Xerox Corp and Samsung. This is a worldwide situation as lots of countries around the world are strongly involved. There are more than 7,500 of global patents related to grapheme. China has the majority of ownership of those intellectual properties. The United States and Korea are just after. European Union, which recognize the potential future profit (and jobs) that could be created from grapheme utilization, just granted a billion euro funding for the investigation of graphene for commercial application development. The patent race concerns a broad range of potential uses. Here some example of application: NV introduced a graphene-infused tennis racket. Apple has filed to patent graphene “heat dissipators” for mobile devices. Saab has filed to patent graphene heating circuits for deicing airplane wings. Lockheed Martin has a U.S. patent on a graphene membrane that filters salt from seawater using microscopic pores. Others patents concerns graphene uses in computer chips, batteries, flexible touch screens, anti-rust coatings, DNA-sequencing devices and tires. Samsung, Nokia have filed patents coverin graphene uses in mobile devices. As stated, some of the patents have found their way into products. A big goal in the graphene race is to find the best ways to manufacture it. A large number of patent filings describe methods of manufacturing graphene. Once products will be sold, this will represent important profit. As soon as they find something, Corporate and academic scientists file a patent for it. There were 9,218 published graphene patents and patent applications filed cumulatively as of May around the world, up 19% from a year earlier. Over the past five years, the cumulative number of graphene patent filings was more thanmultiplied by four. The aim for Corporate and academic scientists to patent their finding is not just to use their finding but by doing so, they want to stop competitos. Indeed, competitor can be prevented to use a new application, Even if you don’t want to use a finding, it can still be good for you to prevent others to use it (even without using it for yourself.) Importantly, some graphene patent filings seem speculative and in certain case, the goal is just to mislead rivals. This is can be view as a potential loss of efficiency. Sources : http://online.wsj.com/articles/SB10001424127887323664204578610092869213354 http://www.bbc.com/news/science-environment-20975580 Show less Reply Dorian Keuller 11 November 2014 According to the previous post, patent race seems to be an important driver of the market structure. Before reading this article, patent race was only, in my meaning, positive because it induces self-surpassing of companies who want to improve themselves. But the economical aspect wasn’t considered. Indeed, firms engaged in a patent race have to invest much in R&D. But…Read moreAccording to the previous post, patent race seems to be an important driver of the market structure. Before reading this article, patent race was only, in my meaning, positive because it induces self-surpassing of companies who want to improve themselves. But the economical aspect wasn’t considered. Indeed, firms engaged in a patent race have to invest much in R&D. But since the first patented invention lead to a gain or sustain of a competitive advantage, it is only a waste of money and time for those who aren’t on the first place. It is quite a controversial dilemma. How should they manage this problem? Should they continue to invest a lot in order to possibly get patent, or should they be passive and try to reach a comfortable and stable situation? As “Thomas Ruelle” says in his commentary, following IBM 6.478 patents have been delivered in 2012. The term “patent race’ is well chosen and it makes us clearly understand the size of this phenomenon. Despite I am not so comfortable with this topic, here is an example of one of the biggest American trade race: Verizon vs AT&T. Actually Verizon and AT&T are the two leaders in terms of wireless subscribers in the US. Both had 34% share of all US subscriber meanwhile other majors only own 16%. A real competition lies between these two leaders for the 1st position. Actually, Verizon is sitting on the top since this company introduced the 4G network faster than AT&T did. Moreover, in 2010 when AT&T and Verizon were still not at the top, they acquire most of low-band wireless spectrum patent. This competitive advantage makes them able to dominate the market. In a more personal aspect, invest in R&D can only be benefit for a company even if it doesn’t get a targeted patent. But can we talk about “wastage”? In my opinion, although the opportunity of a big competitive advantage is not reached, invest in R&D is never lost. Indeed, knowledge would have been acquired anyway. There are always some improvements which could be used for different project. New research ideas could be found or could lead to new projects. In our current world the research departments have to be on the center of occupation. We live on a growing world where developments and improvement are the keys so there always will have positive effects to R&D. But as I told before, I am not so comfortable with this subject. So it could be interesting to discuss more about the following question: -Does the investment in R&D bring some positive aspects or could it be considered as a total wastage in case of losing a patent race? Show less Reply leonce mpawineza 11 November 2014 Patent races are proving to be among the major motivation of innovation and discoveries providing solutions of challenges faced by the modern world. For instance the invention of an electric car by Tesla is viewed as a global solution to the environmental friendly locomotives which have been awaited for along time. With the invention of such a car has made…Read morePatent races are proving to be among the major motivation of innovation and discoveries providing solutions of challenges faced by the modern world. For instance the invention of an electric car by Tesla is viewed as a global solution to the environmental friendly locomotives which have been awaited for along time. With the invention of such a car has made Tesla a renowned brand. Even though Tesla made the invention open to the competitors, it is becoming evidence that companies that are quick to embrance technologies does change the structure of the market. Example is Nissan which is doing relatively well in the sale of electric cars in Norway after embracing the new technology.Volkswagen and other brands comes after. In other fields like medicine. companies like Medtronics in the United states do enjoy big profits as a result of patents acquired due to the rapid of invention of drugs/products awaited in the market thus giving them monopoly power in the sale of these drugs. On the other hand patents races can have disadvantages. This can arise in cases where companies with patents are unable to recover heavy amounts of investment made in the process of R&D due to different causality in the market. Another instance is when the competitor comes up with a substitute product that is more preferred by consumers than the existing product that was also of a patent race. this is mostly witnessed in the phone manufactures like samsung and apple phones that have become so dominant that consumers are unlikely to notice new inventions by other phone manufacturing industries. The conclusion is that firms should do market research well on the product they are about to develop because they might not be able to get the expected returns on the investment regardless the patent. On the other hand if its well done and timing is perfect, there are high possibility of enjoying monopoly status in the market. Show less Reply Beili Zhang 11 November 2014 Patent race: does the winner really takes it all? In this comment, I would like to consider the idea that in the patent race, the winner takes it not necessarily all and the arrival of a competitor in the race can even eventually benefit the company by studying the Apple vs Samsung case. Nowadays, the most known competitors in the patent race…Read morePatent race: does the winner really takes it all? In this comment, I would like to consider the idea that in the patent race, the winner takes it not necessarily all and the arrival of a competitor in the race can even eventually benefit the company by studying the Apple vs Samsung case. Nowadays, the most known competitors in the patent race are without question Apple and Samsung. It is known that many lawsuits of patents infringements has been filed by both companies. “Their dispute started in 2011, when Apple first sued Samsung in the U.S. for copying features of the iPhone. Samsung then sued Apple for patent infringement in South Korea, Japan, Australia, the Netherlands, Germany, France, Italy and the U.K. Apple then filed countersuits in five of those countries.” (1) Indeed, Samsung was first known as as a company that likes to inspire from the others but eager to lose this reputation, they are now competing in the patent race in order to be seen as the next innovative company. For example, they now lead the patent race on the graphene: a material that could revolution the touchscreen world by making the devices incredibly thin and flexible. Samsung has already acquired 17 patents versus 2 for Apple. But the most recent race on patent is on Samsungs smartwatches versus Apple’s Iwatch. Indeed, with the approaching saturation on the smartphone market, the smartwatches might be the best technological devices innovation. This race was allegedly won by Samsung which was the first one to introduce the phonewatch while Apple’s Iwatch is scheduled to launch in early 2015.But the Samsung Gear, which was first commercialised in september 2013, performed poorly in terms of commercial sales. However, analysts say that the coming launching date of Apple’s Iwatch might be the opportunity for Samsung, even if they don’t necessarily know it, for their smartwatch sales to take off. “One of the factors is that is that Apple’s entry into the smartwatch market “brings credibility, which may work to Samsung’s benefit,” says Jefferson Wang, a wireless and mobility consultant at Philadelphia-based IBB Consulting Group. “Samsung entered a white space, which they had to build up themselves, and it’s a heavy lift to get developers involved and build the ecosystem.”That’s because, in the case of wearable devices, the idea of wearing a computer on one’s wrist is still so novel that — no matter how big a slice of the market Apple takes — Samsung executives believe the market can only grow from here, lifting all boats.” (2) In conclusion, while the patent races is undoubtedly one of the main challenges faced by innovative company today, in exceptional case such as the one evoked above, we can refute the general idea that “winners takes it all”. Sources: (1) http://bgr.com/2014/04/04/2014-apple-samsung-lawsuit/ (2)http://blogs.wsj.com/digits/2014/09/10/for-samsung-apple-smartwatch-could-be-a-blessing-in-disguise/ http://en.wikipedia.org/wiki/Samsung_Galaxy_Gear http://www.thewearablestuff.com/samsung-smartwatches-round-watchfaces/ http://www.cnet.com/news/apple-patent-application-hints-at-iwatch/ http://www.macrumors.com/2014/05/15/graphene-apple-samsung/ http://www.businessweek.com/articles/2014-05-29/samsung-leads-in-graphene-patent-applications Show less Reply Gonçalo Ciravegna da Fonseca 11 November 2014 As we have previously approchead, there is a deep relationship between market structure and innovation. In fact, patent races are a concrete example of the way innovation affects competition. In addition to that, as explained above, patent races situations happen when two or more enterprises have the same goal and compete to be the first ones to come up with…Read moreAs we have previously approchead, there is a deep relationship between market structure and innovation. In fact, patent races are a concrete example of the way innovation affects competition. In addition to that, as explained above, patent races situations happen when two or more enterprises have the same goal and compete to be the first ones to come up with an innovation. Furthermore, patents races must be planned in a strategic way because companies have to decide about the intensity and the timing of their R&D investment. In this comment I am going to illustrate some real examples of patent races. The first situation is about the electricity sector. In 1876, Graham Bell beat Gray by two hours and won the patent’s rights regarding an equipment that could transmit speech electrically despite his innovation had a better layout and design. I consider that the motto “The winner takes it all” traduces this situation in a perfect way. On the other hand, the second cenario is about the jeans industry. Jacob Davis invented a prototype for blue jeans. The idea was to put metal rivets on his jeans to increase their durability and he knew that this small detail would have a big impact in his market position. However, Davis didn’t have money to get the patent so he negotiate with Levi Strauss to pay for the application. In the end, Davis didn’t gain much with his innovation comparing to what Levi Strauss acquired. This example shows that in many situations the ones that create an innovation are not the ones that have its profit. In other words, enterprises should consider all the factors that can harm their business. Concluing, I consider that all companies must be aware of the duality that patent races represent and have strategies to face their negative consequences. Source: https://www.legalzoom.com/articles/inventors-who-lost-the-race-to-the-patent-office Show less Reply Adwate Kumar 11 November 2014 One of the potential sectors where patent race may have been observed is Commercial Orbital Transportation Services, i.e. companies which provide shuttles for space travel. As the intellectual property in this sector is quite complex and quite rewarding if successful, it provides optimal condition for a patent race. The company which can build and patent a 100% safe spacecraft will…Read moreOne of the potential sectors where patent race may have been observed is Commercial Orbital Transportation Services, i.e. companies which provide shuttles for space travel. As the intellectual property in this sector is quite complex and quite rewarding if successful, it provides optimal condition for a patent race. The company which can build and patent a 100% safe spacecraft will have a 100% monopoly over space travel. However, the scenario is different. Many companies including Elon Musk’s SpaceX have opted for trade secrets instead of patents. This is due to big holes in existing patent laws, especially international patents, which allow countries like China to ” use them as recipe books” Show less Reply Thomas Boreux 11 November 2014 After reading the text « Patent races: pros and cons » and related articles, I noted that relation between relation and competition is a really complex one. Firms are involved in a real "patent race" in order to be the first to submit an innovation, and we can point out advantages and disadvantages. On the one hand, when different inventors…Read moreAfter reading the text « Patent races: pros and cons » and related articles, I noted that relation between relation and competition is a really complex one. Firms are involved in a real “patent race” in order to be the first to submit an innovation, and we can point out advantages and disadvantages. On the one hand, when different inventors are looking to the same objective, having different ideas to solve the problem can increase to probability to find an adapted solution and lead to an innovation. On the other hand, since only one inventor can be rewarded for all the work and researches, there are lots of waste in the same investments to reach the same objectives. When I saw this week’s subject, I immediately thought about a perfect example of a patent race I discovered in a previous article. I want to talk about the invention of the phone as the result of a long fight between Alexander Graham Bell and Elisha Gray. Gray and Bell were two inventors who worked at the same time on the same communication issue. There is a great controversy of whether those two innovators invented the telephone independently. Gray developed a harmonic telegraph using vibrating reeds in 1874, and showed to the public at the end of the year. On 1876, Gray’s lawyer filed a patent caveat with the same pattern of his innovation as the one drawn in his notebook. Bell’s actions were stopped for three months to permit Gray to develop a complete version of his innovation. During this time, Bell traveled to Washington and issued a patent similar to Gray’s one on the 7th march 1876. There were some technological difference between Gray’s caveat and Bell’s patent, especially on the liquid transmiter and the positioning of the electrodes, but both patterns were quite similar. We discovered later that Bell stole the Gray’s idea because Wilner (Gray’s collaborator) reveal the pattern to him. After different lawsuits, in particular about « which inventor issued the first the pattern », the court announced that « while Gray was undoubtedly the first to conceive of and disclose the invention, as in his caveat of 14 february 1876, his failure to take any action amounting to completion until others had demonstrated the utility of the invention deprives him of the right to have it considered ». In my opinion, as a really competitive person in my life (work, sport,…), I think that patent races are really good incentives to innovation. Nevertheless, in the example above, the lack of « fair play » in these kind of fair play is deplorable and disappointing. Unfortunately, this is sometimes the only way to win the race. The context, the environment, knowing the good people, be at the good place at the good time, these are all important factors to win a patent race. Show less Reply Mario Medina 11 November 2014 It is indeed complicated to find examples of patent competition and that is because it is not so clear when it does exist between two or more companies, however if for an outside point of view it’s hard to identified competition in patents, for the competitors is more than clear who are their rivals in the market. Nowadays there is a…Read moreIt is indeed complicated to find examples of patent competition and that is because it is not so clear when it does exist between two or more companies, however if for an outside point of view it’s hard to identified competition in patents, for the competitors is more than clear who are their rivals in the market. Nowadays there is a big patent war in the automobilist field. This event has produced numerous innovations in the electric and hybrids cars whose appear to be the future on this industry. This big wars between car companies has become in a big opportunity for batteries companies such as “Panasonic” or “LG” and although for the oil industries has a negative effect this phenomenon appears to be more reliable for the car companies with the progress of the innovation of the cars. In other words this patent race has been a really good event for the innovation of the automobile industry and its economy, producing at the same time a huge advance for the car engines, just like Rebecca Lawrence, partner and IP expert at law firm Powell Gilbert LLP, say: “The signals very much suggest that the motor industry is set to become more litigious in the near future”, “Historically, periods of rapid innovation…are usually accompanied by fierce battles over the right to use new technologies.” (1) In this case of the automobile wars we can identify the new niche that is emerging from this races, the electric engines based in batteries are producing also an important develop for the energetic industry and alternative fuels. Here we can realize that the R&D that car companies such as Toyota, Nissan and General Motors, have been invested in this kind of advances more than the appearance or the comfortableness of the cars for example. This fuel innovation, in which car industry has evolved to, has been a huge and greener hit but it was a slow process until the car war became more aggressive. We can observe that in this sector the patent race has resulted with positive results. Another field that suffers of patents races, also mentioned in the article citied, is the smartphone one, and this aggressive war between cellphone companies has produced a lot of advances in their area, at the same time generating big impulses to the economies of their markets, however it is necessary to remark that this confrontations are also producing a lot of economic waste in patents just for being ahead of other companies, this ferocity may also result in advances stagnation. (1) http://www.ft.com/cms/s/0/f3875250-40a3-11e3-ae19-00144feabdc0.html#axzz3IluQymNI Show less Reply Dernicourt Anthony 11 November 2014 A good example of industry in which there is a real patent race is the Leisure industry, especially the technological part, the rides manufacturers. In this sector, there are a lot of different companies, all competing on a worldwide market. Rides manufacturers sell their products to amusement parks in a lot of different countries. They develop new kinds of rides, with…Read moreA good example of industry in which there is a real patent race is the Leisure industry, especially the technological part, the rides manufacturers. In this sector, there are a lot of different companies, all competing on a worldwide market. Rides manufacturers sell their products to amusement parks in a lot of different countries. They develop new kinds of rides, with new technology that they need to patent. They need it because of the need of a great protection against chinese firms, copying every product created by european, amrican or japanese specialized manufacturer. It’s a race, because each manufacturer needs a large collection of different rides to be able to sell it to lots of theme parks companies. Often in this sector, there are popular products duplicated in lots of different theme parks. The Boomerang Roller coaster of Vekoma (dutch manufacturer) for example, sold in more than 50 models (along with models variations). Another example are the Zamperla products (Italian manufacturer) selling standard products like Magik Bikes, Disk’O coaster, Crazy Bus, etc… every year. So finding THE great innovation is very important in this sector. So manufacturers are in a patent race. This race is necessary. Why ? Because the whole industry is based on innovations. Rides from 1980 are not popular anymore, people always want more sensations and Theme parks will not buy obsolete rides. The evolution of the 3D technology has also a high impact in this industry, opening doors to new possibilities. How does it influence this sector ? First of all, even if patents exists, they’re broad so that other manufacturers can easily copy an innovation just by changing some technical details. We can observe some example as the Rockin’Tug (Zamperla) and the Kontiki product (Zierer, Germany). So even if there is a protection, the competition is high and a good idea can be duplicated. It shows the level of competition in the sector… But the role of a patent is relevant (as I said, some firms, mostly in China, copy the entire product without changing anything). So, the sector is evolving quickly, with a lot of new products designed each year with concrete results. But even if the results are there, the invest rate in R&D is gigantic in this king of firms (it seems obvious). So, we can observe in this case the two effects of the patent race describe in this paper : innovations are spurring, but it includes a lot of wasting money for each manufacturer. Sources : http://en.wikipedia.org/wiki/Boomerang_(roller_coaster) http://en.wikipedia.org/wiki/Zamperla http://fr.wikipedia.org/wiki/Zierer#Kontiki http://www.amusementtoday.com/2012/11/14/zamperla-awarded-judgement-for-trademark-infringement/ Show less Reply AKASHDEEP SRIVASTAVA 11 November 2014 An interesting and very recent example of a patent race is the fierce competition among Google, Apple, Samsung and the likes in Curved Glass Display technology. After having reached the pinnacle of progress in smartphone and tablet devices, the wearables like watch, health monitoring devices have become the centre of focus of nearly every technology company in the world. This…Read moreAn interesting and very recent example of a patent race is the fierce competition among Google, Apple, Samsung and the likes in Curved Glass Display technology. After having reached the pinnacle of progress in smartphone and tablet devices, the wearables like watch, health monitoring devices have become the centre of focus of nearly every technology company in the world. This field directly relates with the requirements of a patent race wherein a large number of firms are working in the same field and direction in the hope of creating and capturing a new market niche of the “Wearables”. But this also represents an interesting insight, something peculiar to the technology industry and which could also be relevant to many other industries. Patent race doesn’t always lead to zero-sum rewards or negative outcomes for the social welfare. The field is extremely focused in the case of glass display but various firms have come with different variations of the underlying technology and manufacturing processes that will lead to a difference in the price-quality ratio of all the variants (http://www.techtimes.com/articles/1946/20131211/apple-wins-patent-for-curved-glass-display-technology.htm). These variations will help simple health-monitoring devices to be within the reach of the common man and there will also be devices which will remain exclusive to some of the firms and people but will also be very limited in use to the general public. The patent race in this particular area can then be described as one which achieves social welfare and well as one which achieves the purpose of fostering innovation. The firms competing in the area hope to build a competitive advantage over other players and this seems to be beneficial for one and all. Show less Reply Laurence Busseniers 11 November 2014 All type of medicine producer pursue the same goal: propose medicines and make profit. When I think to an example of patent race I immediately consider the pharmaceutical sectors. Indeed, big firms even as generic producer fight to be the one who produce the first and the cheapest one. We also will talk about the wish of generic producer that…Read moreAll type of medicine producer pursue the same goal: propose medicines and make profit. When I think to an example of patent race I immediately consider the pharmaceutical sectors. Indeed, big firms even as generic producer fight to be the one who produce the first and the cheapest one. We also will talk about the wish of generic producer that the innovation of medicine fall in the common knowledge area without be protected by a patent. Let’s consider the case of Cipla and Novartis. Cipla is an indian generic producer. Novartis tried to patent an innovation concerning an anti cancer medicine in april 2013. The patent for it was reject by the Indian supreme court. Therefore, Cipla put on the market a generic of the medicine produce by Novartis at a lowest price. The following idea seems logical: Cipla by proposing cheaper anticancer medicine catch a high part of the demand and therefore generate a higher profit. We can understand that the patent race leads to a more competition. It’s important to be the first and to be able to protect his patent. Due to different national regimes of patent application the protection of patent is difficult. Thus, firms may not find it interesting to invest in R&D if they know that the innovation they find could fall in the public area without generating any extra profit for them. Show less Reply Charlotte Irgens 11 November 2014 In this blog post the topic of “patent races” are dealt with. As explained above a patent race takes place when two or several firms pursue the same goal and tries to be the first to be able to file a patent in order to obtain a central position on its market. As pointed out in the above blog post,…Read moreIn this blog post the topic of “patent races” are dealt with. As explained above a patent race takes place when two or several firms pursue the same goal and tries to be the first to be able to file a patent in order to obtain a central position on its market. As pointed out in the above blog post, the literature on patent races is largely theoretical, relies on game theory, and suffers from a lack of empirical analysis. However, there exist examples that resemble patent races. Here I will explain some of these situations. One of the oldest examples of a patent race is the invention of the telephone. In 1876, Alexander Graham Bell applied for a patent on a device that could transmit speech electrically. His rival, Elisha Gray, applied just two hours later. That Elisha Gray’s design turned out to work better did not matter, Bell had won the patent race and history now remembers him as the official inventor of the telephone. The industry of the telephone, namely the communications technology industry, is today characterized by several patent races. A famous example is the Samsung – Apple case. Both parties have sued each other for patent infringement and the case is still not settled. During the last three years the two technology giants have filed more than 40 patent lawsuits against each other. Recently, they however agreed to drop all charges against each other in all other countries (more than 9) than the US. In the US court, the Apple Samsung fight continues. One can ask oneself whether the resources and money spent on these lawsuits are really worth it. How about spending these resources on more R&D? A danger with patent wars can be that the involved firms focus more on beating the other firm than on actually innovate and create something of value. Another industry that has seen several patent races is the chemical industry. An example is the war on patents involving graphene (a pure carbon). British scientists were the first to discover graphene, but its exploitation is shifting more and more towards research communities in Asia and the US. UK struggles to keep up in the race to exploit this new “wonder-material”. According to recent published figures China leads the patent race related to graphene with over 2,204 patents and patent applications. In comparison the UK has published 54 patents. Countries and organisations with high integration levels amongst different scientific and industrial sectors are well placed to exploit the research on graphene as this is a material that can be used in many different sectors, e.g. communication technology, biotech, energy and aviation. Here one can also point to the fact that R&D maybe could be conducted more effectively if research communities across the globe would cooperate and share ideas instead of racing against each other. However, on the other hand, this kind of race can lead to that the progress on the development of graphene is accelerated as the involved scientists work faster than they probably would if they did not face this fierce competition. Hence it can be concluded that patent races in some cases can help spur innovation and especially the pace of innovations. However, it seems reasonable to argue that if firms were less focused on winning patent wars and more focused on the value they can create with their innovations, this would prove a larger benefit for the societies they operate in. However, as most firms’ prime objective is to maximize profits, making them stop conducting patent wars seems like a tough challenge. Sources: https://www.legalzoom.com/articles/inventors-who-lost-the-race-to-the-patent-office http://www.ibtimes.co.uk/patent-wars-2012-five-key-infringement-lawsuits-416273 http://www.forbes.com/sites/amitchowdhry/2014/08/06/apple-and-samsung-drop-patent-disputes-against-each-other-outside-of-the-u-s/ http://www.techweekeurope.co.uk/workspace/uk-graphene-patent-104257 Show less Reply Charlotte Moreau 11 November 2014 According to a paper published by the European Patent Office in 2013, IP-intensive industries contribute in 26% of employment and in 39% of GDP in the European Union. These numbers are quite important and show how much innovation can be beneficial for a market. Patents are great in the way that for a specific problem, several firms are working…Read moreAccording to a paper published by the European Patent Office in 2013, IP-intensive industries contribute in 26% of employment and in 39% of GDP in the European Union. These numbers are quite important and show how much innovation can be beneficial for a market. Patents are great in the way that for a specific problem, several firms are working on it and will get different processes to solve the issue. Even if there is only the first to achieve it that is rewarded, that doesn’t mean the other firm’s solution is less efficient. Since there are many IP-intensive industries, I will here focus on one particular: the green technologies industry. In fact, in 2010, the International Bureau announced that a number of national patent offices will treat in priority applications dealing with environmentally-friendly (green) technologies. At that time, getting a patent could take up to 30 months. That was necessary to put a program in place that could reduce this length. The International Patent Cooperation Union is an organism to help firms find out if the firm’s idea is patentable in another country and if another party may have taken your idea improperly and patented it in a foreign country. This announcement has spurred innovation in several countries, namely UK and China. The United Kingdom was the first one to react by creating a system to fast-track green patents. China has reacted to that by creating its own accelerating process of environmentally-friendly patents. Of course, the two systems are not exactly the same but they aim the same goal; promote green technology. As there is no official definition of a green patent, those applications are treated case by case in the UK whereas in China, rules are firmer regarding the paper work. This patent race is not exactly about two firms battling to be the first one at the end of the track. Nevertheless, UK and China are competitors in the sense that their patents can be applied on an international level. The UK was the first to promote these green patents but China reacted fast after it not to be left aside. Even if they compete with each other, they talk together in order to work with other major trading partners and so to reduce the length of getting a patent to 9 months. As a conclusion, I think this patent race benefits the economy and the environment. Nowadays, it is important to promote the environment and make people aware of the green issues. By implementing these systems, UK and China support the innovation in environment, a sector where there is still much to invent. Sources: http://ec.europa.eu/internal_market/intellectual-property/docs/joint-report-epo-ohim-final-version_en.pdf http://www.chinaipmagazine.com/en/journal-show.asp?id=660 http://info.inovia.com/2012/07/china-now-fast-tracking-green-patents/ http://www.ip-watch.org/2009/05/14/uk-patent-office-to-fast-track-green-inventions/ Show less Reply Ivan De Meunynck 11 November 2014 First of all, despite what we might think, patent races were already occuring in the nineteenth century where two historical examples took place. In my first example, Alexander Graham Bell deposited a patent for his invention (the first telephone) and got it because his horse was faster than the one of his opponent. It was found out later that the…Read moreFirst of all, despite what we might think, patent races were already occuring in the nineteenth century where two historical examples took place. In my first example, Alexander Graham Bell deposited a patent for his invention (the first telephone) and got it because his horse was faster than the one of his opponent. It was found out later that the invention of his opponent was better but the patent had already been given… This brings my first comment: souldn’t patents be accorded to the best solution found and not to the first which is proposed? As a matter of efficiency, i think it should be given to the first proposed and replaced as soon as a better solution is found. This would give priority to quality over rapidity… The second old example I found is the invention of the “Levis jeans”. Originally “discovered” by Jacob Davis, it was Levi Strauss who got the patent because Davis signed away the rights to his invention (as he didn’t have enough money to develop it…) before realizing its true value. These two famous examples show the biggest problem linked with patents: “the inventors with the brightest ideas can somehow end up with nothing… There are also very recent examples of patent races. Google giving more importance to quantity over quality: One of the most successfull companies in the acquisition of patents is Google which got nearly 2000 (their number of patents per year has been significantly increasing over the last years) patents only for the year 2013 (a famous example is the “Google glasses” but there are much more). The goal of Google is to “avoid war and cut the edge for areas it wants to protect”. But Google is facing a problem: “the patents it has acquired have not lived up to their price tag”. As a result, “Google decided to focus more on building a patent portfolio with in-house applications”. Concerning the patents’ debate about volume versus quality, patents’ experts give importance to quality rather than volume as it is the most important issue in the case of legal defences. But giving priority to quantity can be beneficial to detect any type of attack made by an opponent. Facebook, focusing on quality On the other hand, we have companies such as Facebook that “concentrate on quality rather than sheer volume assembling rights in core areas “such as mobile and the internet in general”. The advantage of choosing quality over quantity was showed when it won a “legal battle” against Yahoo in 2012. Show less Reply Midas De Bondt 11 November 2014 I wanted to writed a commentary abvout the car manufacturing industry since some weeks. The reason for this is fairly simple: I was astonished by the ranking the Boston Consulting Group makes every year on innovative companies (“the most innovative companies”, October 2014). The number of Car manufacturers in the top thirty was not less than 8. Only the IT/Mobile…Read moreI wanted to writed a commentary abvout the car manufacturing industry since some weeks. The reason for this is fairly simple: I was astonished by the ranking the Boston Consulting Group makes every year on innovative companies (“the most innovative companies”, October 2014). The number of Car manufacturers in the top thirty was not less than 8. Only the IT/Mobile (very hard to make the distinction nowadays) usual suspects do better. You can say that the car manufacturer industry is an example of a patent race that stimulates innovation: It seems pretty logical that car manufacturers are striving for the same goals and are thus pursuing the same patents. Examples of these can be to improve fuel efficiency, to reduce carbon dioxide emission or to improve the engine parts. The fact that companies that are pursuing the same goals (and are thus in an intense patent race) are ranked among the top innovative companies may lead to think that patent races stimulate innovation. I want to bring up some remarks that counter this argument, though. A first one is that it is hard to find a measure for innovation and even harder to compare different companies on their innovative performance using the same metric. I believe that a metric to compare companies on their innovative performance should be company-specific, as the goal of each company’s innovative strategy may be different (Insight drawn from professor Gailly’s classes). Another argument is more about the actual theory that patent races can stimulate innovation and has already been mentioned in the introduction. It may very well be that they are not patenting because they want to improve their product. It may be that they are patenting to protect existing patents or to prevent competitors from achieving the innovation. This kind of innovation/patenting is obviously not necessarily an advantage from a social welfare point of view. A final remark to counter the argument is the fact that I believe the most innovative car manufacturer, Tesla Motors, was not competing in the patent race. They managed to reinvent the business model by betting completely on electric cars. In my opinion this was not the kind of patents the other car manufacturers were looking for. This innovation is obviously advantageous from a social welfare point of view. The fact that they were not in the patent race can be clearly seen by the fact that they have opened up their patents for public use. The diffusion following up on this is obviously also advantageous from a social welfare point of view. The conclusion of my short commentary is therefore that even though it may seem that the car manufacturer industry is a good example of a patent race spurring innovation, there are many other factors that have to be taken into account. Show less Reply Kasper Vagle 10 November 2014 Video war As the article points out, the patent race might create big amounts of wasteful effort on trying to achieve the same goal. An example of this is the format war between Sonys Blue-Ray and Toshibas HD DVD in the middle of the 00's. This war between these two tech giants goes further beyond the race for only the patents…Read moreVideo war As the article points out, the patent race might create big amounts of wasteful effort on trying to achieve the same goal. An example of this is the format war between Sonys Blue-Ray and Toshibas HD DVD in the middle of the 00’s. This war between these two tech giants goes further beyond the race for only the patents about a product, it also involved the implementation. The need for a new and better format for screening videos came after the fist HD TV’s came on the market. The two different standards developed by Sony and Toshiba was in response to that. But the story of patent infringement starts before that. The inventor of the blue lazar ray that the Blu-Ray uses was the Japanese professor Shuji Nakamura. This year he received the Nobel Prize for Physics for his research and findings on blue light-emitting diodes. It was while working for a Japanese company he started to develop his inventions in lighting. He was later paid 180 million dollars from his former employee for the use of his patent. This leads us back to Sony and Toshiba. They both came up with their own solution to the new demand for higher resolution on videos. The different solutions, Blue-Ray and HD DVD was so different that non of them could claim that their patents excluded the other companies innovation. For that reason the race for allies started. Sony managed to get several big players in the industry on their team, and after two years Toshiba announced that they would give up the race and the closed all their business related to the HD DVD. Several times there were attempts to avoid this war. Similar conflicts have been avoided before for example the wifi standard, where companies came together to create one standard in stead of fighting against each other. The result was millions of dollars wasted on technology that could have come to a better use if there had not been a conflict between this big players in the industry. So the example shows that the race towards the same goal can be very expensive and lead to a loot of spoiled resources. Show less Reply Stroobants Benoit 10 November 2014 In our actual society, people more and more think about innovations trying everyday to become the best in its industry and fighting constantly to stay on the cutting edge of each new business idea launching on the market. As we have already noticed, it's a main reason why companies have to balance between competition and Innovation. Indeed, when a company invest…Read moreIn our actual society, people more and more think about innovations trying everyday to become the best in its industry and fighting constantly to stay on the cutting edge of each new business idea launching on the market. As we have already noticed, it’s a main reason why companies have to balance between competition and Innovation. Indeed, when a company invest large amount of money in R&D to perform its new business project, it hopes that all the resources used will be rewarded by a pole position on the market with strong added value, wide attracted customers segments, and so on; in order to cross their breakeven point as soon as possible. Therefore, to achieve their objectives, these companies gonna try to obtain patents on the various specific industries they used to achieve these goals. In the lights of what I have just said, we gonna try to identify a situation that looks like what’s commonly known as “a patent race”, where several firms are tracking a similar objective and are filing patents in the hope of seizing a new market niche. For instance, in the coffee industry, we could speak about the trendsetter, Nespresso (Nestlé) that developed an easy and fast way to make a delicious coffee through little capsules in aluminium. A couple years ago, it was the giant Philips that came on the market with its idea of coffee pods called Senseo and it was actually not the only ones. These companies had succeeded to patent their industries over decades but these patents are now ended. Nowadays, more firms than ever try to dethrone these giants of the coffee industry by constantly developing their talents to address the need of their potential future clients. So as a recent little start-up called “Nessup” that is designing reusable capsules, filled with the amount of coffee you desire and compatible with the Nespresso coffeemakers. Nessup highlights the ecological aspect of its concept and would like that consumers take into account that they use fair-trade and eco-friendly coffee grains. As you can see, the patent race is a topic that takes always part to the discussions. As well as in the past than in the future, companies will always fight to build their industry as a standard able to be patented. As big firms did it before, Nessup will maybe arrive to patent its new recent release on the market; but the race will always go on… Show less Reply Yick Tang 10 November 2014 Innovation is undoubtedly a social wealth and should encourage its implementation. However, generation of intellectual property requires a lot of manpower and capital. After publications of Inventions, if there was no patent protection, other competitors would be able to counterfeit in low cost. Therefore, for stimulating innovation, inventers are given excess profits to compensate for their risk taking. That is…Read moreInnovation is undoubtedly a social wealth and should encourage its implementation. However, generation of intellectual property requires a lot of manpower and capital. After publications of Inventions, if there was no patent protection, other competitors would be able to counterfeit in low cost. Therefore, for stimulating innovation, inventers are given excess profits to compensate for their risk taking. That is the reason why patent races appears. Patent race in the patent system is a veritable “Winner takes all”. Because when a firm announced that it has completed a project and applied for a patent, other companies would have to abandon the ongoing research work on the same project. On this aspect, patent race creates a negative factor of overlapping researches. However, patent race also has a positive aspect. Lending companies in certain circumstances need to take strategic partner ships and alliance. And for laggards, they have to catch up with leading companies and avoid their own disadvantage in technology in the future. Laggards in the process of following the leading companies can use richer cooperative strategy to overcome their disadvantages and play its own unique advantages. We can try to think about that if a laggard just faced strong competitors by itself, it would not be able to win in competitions. This time to seek outside assistance, a joint development strategy would be a choice between laggards. That not only brings companies, existing capital, technology and human resources together, but also achieves even more power than its opponent’s strength in a short team. That would achieve “1+1>2” effect, good economic returns and break opponents’ monopoly. In my opinion, Pros of patent race are great than cons patent race. Even though it is less efficiency in “Winner take all”. Many companies research on the same project, but just only one can get the patent welfare. But other than that, for survival, companies would cooperate with others. As a consequence, new technology could be invented quickly. There is a good example about Sony Ericsson, which established in 2001, was a tycoon of mobile communications ten years ago. In October 2001, Sony and Ericsson cooperated and established Sony Ericsson. Sony had great technology of electronic device and Ericsson mainly researched mobile. Sony Ericsson created the first mobile phone which had cyber-shot camera. It was a revolutionary product a decade ago. It could be the first ancestor of smartphone. So, patent race stimulates technologies innovation. That is an important thing for improving our life. Reference: http://en.wikipedia.org/wiki/Sony_Mobile_Communications Show less Reply Fares Yanis 9 November 2014 Patent races are assumed as strong drivers of market structure. For a firm staying on the market a patent is a driver of market power, it helps the incumbent firms to defend their position on the market by harming the potential entrants. Patent races in the homogenous goods are driven forces which aim to spur innovation and competition. The competition…Read morePatent races are assumed as strong drivers of market structure. For a firm staying on the market a patent is a driver of market power, it helps the incumbent firms to defend their position on the market by harming the potential entrants. Patent races in the homogenous goods are driven forces which aim to spur innovation and competition. The competition could be very hard because of the scarcity of ideas. In my view, there are two main opposites effects of patent races : 1° The competition and the efforts deployed give the potential advantage of spurring innovation. 2° Because of their « winner-takes-all » nature, patent races have the potential disadvantage of generating wasteful duplication of efforts : competitors could bring the same efforts but only one would be rewarded among the competitors. The balance of those 2 opposites effects depends on the innovative development : ideas are limited ressources but also common knowledge . Let me illustrating with examples of patent races, when firms of the same industry are battling in order to get patents to increase the size of the market. 1) Thomas Edison and the inventive race on the light bulb and electricity market.  M. Edison had multiple rivals pursuing the exact same inventive goal : a commercially viable light bulb. With more than 30 U.S. patents in his actif, Edison began to work in 1878 on the incandescent light bulb. But many competitors in the same industry had a breadth of patents. The competition was particularly difficult for M. Edison with Mr E.Sawyer and Mr A.Man, because the differents « teams » were generally quite concerned about who seemed to be ahead at any given moment. The competitors were embroiled in a hard-fought priority battle at the U.S. patent office over which team had been first to achieve a key insight. In The myth of the Sole Inventor Lemley explores the under appreciated dynamic of simultaneous invention and the problems it poses for the conventional economic justifications of patent protection. Edison’s contribution in this race is seen as an improvement of production of light bulb. 2) IBM wins IBM Wins Annual Patent Race for 20th Consecutive Year (2013)   IBM was celebrating 20 consecutive years heading up the list of the Top 50 U.S. patent assignees. IBM being the leader in many fields, the focus is on the analytics and cloud computing, which are growing fast and not commuter hardware as was traditionally the case for IBM. By working together with Cleantech Compagnies, Victor Cardona (patent attorney) focuses on protecting the Intellectual Property of Cleantech companies inlacing patents, trademarks and copyrights but also devoted to helping non -US entities obtain protection in the US based on their home country rights. Sources :  Lea Shaver “ Illuminating Innovation: from Patent Racing to Patent War”  http://www.renewableenergyworld.com/rea/blog/post/print/2014/01/ip-focus-ibm-wins-patent-race-again  http://www.ificlaims.com/index.php?page=misc_top_50_2012  http://www.tomshardware.com/news/ibm-patent,20373.html Show less Reply Thomas Ruelle 5 November 2014 What I particularly like in each of the topics covered, is the lack of common agreement on the solution or measures to take. It seems that it does not exist any pure innovation driver that do not affect in a negative way innovation up to a certain point. Fortunately for us, it makes the argumentation more complex and interesting. Here…Read moreWhat I particularly like in each of the topics covered, is the lack of common agreement on the solution or measures to take. It seems that it does not exist any pure innovation driver that do not affect in a negative way innovation up to a certain point. Fortunately for us, it makes the argumentation more complex and interesting. Here it is the same. On one hand, a patent race spurs innovation and force innovators to think smarter and faster, but on the other hand it creates a lot of waste since only the first “patenter” gets rewarded, which leads to a gap between innovative effort that company pay and the amount of effort that is socially optimal. In that case we also need to create/design a patent form that balances incentive to innovate/risk of innovating. The biggest patent war that directly pops in mind is Apple VS Samsung and if we look at IBM with its 6,478 patents obtained in 2012, you have a pretty good idea of how far and fast the race can go, and how much that costs. Nevertheless I am unfortunately not familiar with examples where companies fight for a patent that is supposed to give them access to niche market. Therefore I thought about other questions and examples related to patent race, namely: • Does the high stake of the race give incentive to company to industrially spy competitors instead of investing in a “no-guarantee game”? • Is there any situation where companies take part in race for other reasons than capturing market share through competitive advantage? A problem that is according to me worth to cover is the fact that in a patent race, what matters is not who came up with the innovation but rather who did apply for the patent first. It gives a lot of space for industrial espionage and other related behaviours. Indeed, the pressure induced by the “winner-takes-all” aspect of the race could represent a reason for companies to not poor big money into R&D but instead spy competitors to shortcut all their R&D process and apply first for a patent. By doing so, the risk of a competitor patenting an innovation first decreases in terms of lost investments. The question then becomes; in addition to significant R&D costs and the associated risk of someone else filing first for the patent, does a company should invest additional resources to keep all strategic information in-house and prevent any leakages? On one hand it protects you against industrial espionage but on the other hand, it adds up to the total upfront investment, with no guarantee. Would a company agree to bear increase the potential financial loss? From my understanding, in most circumstances companies do invest a lot in R&D in order to outperform the market and hedge against competition though patent that represent competitive advantages. It seems quite understandable, if firms want to capture increasing market shares, that they have to invest a lot. However, we can assume that some companies do not have as corporate strategy to perform better than competitors, either because they do not have sufficient resources to poor into their R&D department or simply because they do not have the ambition to lead the market. In such situations those companies, do not heavily invest in innovation research as their competitors but do invest the minimum needed to follow the market trends and keep on track. And we can assume that those companies patent for smaller innovations that will not change the market structure, but that could allow them to keep active on the market as follower. We could also imagine a situation where an organisation files for a patent just to reward the inventor’s work. I guess that there is nothing more rewarding for an innovator to have his/her name on a patent. That could be a way for the company to reward its workers who did contribute a lot to the company’s R&D department. It would then build some innovator’s reputation. Then patent would not be considered as a way to shortcut competition but rather as an additional achievement to add to the inventor’s price list. In some narrow specialized field, where the everyone knows each other and the number of specialists is small, I could think about patent races that would be more a war of specialists’ ego than something else. Show less Reply Marta de Sousa Lucas Caeiro 5 November 2014 According to Christopher Harris et al (1985)(1) patent races are assumed as important drivers of market structure. For a firm already in the market a patent enables it to sustain its market power, by harming potential entrants possibilities of entering in the market. Therefore, the importance of “pre-emptive” patenting term – “strategic acquisition of patents by an incumbent firm solely…Read moreAccording to Christopher Harris et al (1985)(1) patent races are assumed as important drivers of market structure. For a firm already in the market a patent enables it to sustain its market power, by harming potential entrants possibilities of entering in the market. Therefore, the importance of “pre-emptive” patenting term – “strategic acquisition of patents by an incumbent firm solely to prevent potential rivals from entering the market” – had been increased. Nevertheless, in my view, patent races when concerning homogeneous products scarcity of ideas can enhance competition and thus innovation, in the sense that the first firm to discover a new idea get the patent. In the following comment I aim at illustrating some examples of patent races, that is when firms of the same industry have similar goals and try to obtain patents in order to improve the size of “market niche”. The first example comes from the electric industry in the nineteen century with Thomas Edison (2). He was facing in an inventive race, hence he had several contemporaneous rivals pursuing the exact same inventive goal: a commercially viable light bulb. In 1882, Edison started a large scale electric light service in New York, besides that at this time, several other companies were also mass-producing electric light bulbs—and handling their own patent portfolios. Due to the existence of several competitors, Edison´s contribution and participation in this race is seen as an improvement of production and distribution of light bulb. If gas lighting was extremely useful for industry, the potentialities of electric light could emerge from the household consumption and need. The recognition of Thomas Edison´s “improvement in electric lamps” was issued in 1880 through the patent ´898, “one among other patents that Edison sought on the light bulb technology”. The further examples are more contemporaneous and entail the technologies’ industries. Bloomberg Business Week (3) have issued that Samsung Electronics is the worldwide leader in what regards Smartphone’s, televisions and memory ships is seeking to accumulate patents on grapheme, which is a very thin touch screen material, and that among other features is able to conduct electricity and it is perfect for wearable devices like smart watches and for tablets. And, in Claire Kim´s words “The first companies to commercialize graphene technology in mobile devices will have an advantage over the rest of the industry”. Additionally, according to the 2013 report from the U.K.’s Intellectual Property Office, Samsung appears at first place concerning the acquisition of patents for graphene: 210 graphene´s patent applications, whereas Apple has filed at least two patent applications that mention grapheme. The same report also emphasizes IBM (64), Xerox (32), Foxconn Industries (35), and Fujitsu (32) among other companies that have submitted applications. BCC (4) also stated, in 2011 that Apple and Microsoft were involved in a new patent race over touchless gesture-controls, hinder others to use the same gesture controls or, alternatively charge them a license. Other companies such Qualcomm and Extreme Reality 3D had also acquire patent rights to ensure touchless control. Also another interesting case (5) concerns the “Reminders” on Apple, Amazon and Google. Apple explains Reminders as “Say you need to remember to pick up milk during your next grocery trip. Since Reminders can be location based, you’ll get an alert as soon as you pull into the supermarket parking lot”. On the other hand, Amazon (Location Aware Reminders) defines them as covers the use of location based reminders to remind a user “to purchase certain items such as, for example, as milk, bread, and eggs”. And Google (Geocoding Personal Information) as a coverage that triggers a “voice reminder or making a computing device vibrate when a user approaches a location if ‘one of the user’s events is a task to pick up milk and bread”. This actually illustrates well the issue behind patent races – it is known as “Got Milk?” patent race. (1) Christopher Harris and John Vickers, “Patent Races and the persistent of monopoly”, The journal of industrial economics, June 1985 (2) Lea Shaver “ Illuminating Innovation: from Patent Racing to Patent War” (3) http://www.businessweek.com/articles/2014-05-29/samsung-leads-in-graphene-patent-applications (4) http://www.bbc.co.uk/news/technology-15492980 (5) http://beta.slashdot.org/story/160822 Show less Reply Luyanqi Zou 5 November 2014 Technological innovation is a major source of economic growth. R&D is crucial as core capability and competitive advantage for the modern companies in the fierce market competition.The following factors are affected competition advantages in the patent race: 1.Expenditure (B ranch, 1974)Corporate profits are funding research and development; Of course, the success of research and development will cause an increase in corporate profits.The…Read moreTechnological innovation is a major source of economic growth. R&D is crucial as core capability and competitive advantage for the modern companies in the fierce market competition.The following factors are affected competition advantages in the patent race: 1.Expenditure (B ranch, 1974)Corporate profits are funding research and development; Of course, the success of research and development will cause an increase in corporate profits.The probability of obtaining a patent on the invention only depends on current business research and development expenses, Regardless of research and development experience in the past.When the cost affected the successful of patent innovation,Monopolist and new entrants in the research and development on which one is willing to spend more, or which one is more likely to be the first successful innovation,is effected by efficiency and substitution effect. (G. ilbert., Newbery, 1982)Monopolist for an innovative,even if not used, also have an incentive to get it for property rights and won the patent race victories.Even if a product innovation and monopoly products and non-discriminatory(not worth the cost to pay for the introduction of new products), the monopolist will be required to obtain ownership of the product in order to avoid competition. Thus,entrants can prevent competition though wining the patent race.On the other hand, due to the substitution effect, new entrants have an incentive to pay the cost of more innovative in order to obtain a patent. Assumed that new entrants to pay more and they get patent earlier than monopoly, its marginal cost is lower than the monopolist.Then the new entrants will replace the original monopoly, they become the new monopoly.(Grossman,Shapiro, 1987)The research indicates that in multi-stage patent race, Once the impact of these actions are taken into account, Leader in the typical approach is to strengthen research and development spending, then,Followers will flinch. However, if the followers in the first stage to keep the leader, the two companies would strengthen efforts to win the second stage victory. 2.experience advantage (Harris, V. ickers, 1985)The research emphasized the role of patents and other race experience or learning effect.The probability of winning patent race is not only decided on the current research and development expenses, but also decided on past-accumulated experience. At each stage of the game in the patent race, companies decision-making relies on its previous experience. 3.incumbent lead (Dasgupta ,Stiglitz, 1980)The research showed that incumbent monopolist would have a greater incentive to innovate. Because if new entrants to get the patent, the market will become a duopoly. If the patent obtained by the incumbent, market remains exclusive.Competition between new entrants will reduce time of research, until the value has been offset by the cost of research and development.But the monopolist will be prepared to spend a little more, because the monopoly of the return exceeds the duopoly of income.Thus they monopoly on innovation preemptive and continue to maintain its monopoly position. 4.spillovers (Dasgupta, 1988) Spillover effect reduces the motivation of enterprises in the patent race to win. If the spillover effect is large enough, Then the companies will be willing as a follower, to reduce innovation and investment, The result is a Waiting game rather than a race, That is, each enterprise hope that other business innovation. Different industries, different economic environment, factors affecting the patent race is different, companies can win in the patent race, where its industrial characteristics, their own experience, expenditures, size of the business, whether there are advantages reign. For example,there are many lawsuits between major mobile handset makers due to the patent problem.Earlier in the year Google accused Microsoft, and others of organising a hostile campaign against its software, “waged through bogus patents”.Microsoft said it now has patent deals with ten companies covering their use of Android.(03/2010)Apple filed a lawsuit with the US International Trade Commission (ITC), said HTC infringed Apple touch-screen interface, internal architecture and other 20 patents, and asked HTC to stop selling infringing products in the United States and advocacy. HTC also to ITC filed a patent infringement case against Apple, alleging that Apple infringed five patents of the company, requested the Commission to stop in the US market iPhone, iPad and other products. The modern high-tech is not who is the incumbent who had research and development strengths, Mainly depends on funding and spillover effects.In some high-tech industries, innovation and risk,which requires a lot of capital investment, Such as biotechnology, new energy and other industries.At this time the victory depends on the patent race expenditures. However, in some industries, such as the information industry, software development, patent competition, new entrants or small business may sometimes be better to win than the outcome of a study incumbent. Factors affecting the patent race is a comprehensive, not one aspect of the factors. Such as morphology, In traditional industries, experience, cost and efficiency factors and the incumbent advantage are the most important factors affecting the patent race. In comparison to the high-tech industry,Traditional industries with investment of resources is characterized,who has an advantage in terms of cost and efficiency of resource inputs, will will have an advantage in the patent race. Traditional industries in business efficiency generally through a learning curve, Usually, companies which enter the market early or the incumbent, the learning curve is more obvious.And the incumbent also set barriers to entry, the opponent at a disadvantage in the patent race.Therefore, the incumbent has the leadership advantage. link: http://www.bbc.co.uk/news/technology-15427575 http://www.bbc.co.uk/news/business-15343549 Show less Reply Sebastian Singer 5 November 2014 In the following comment I would like to describe two different markets which show striking characteristics of a “patent race” between several firms. I chose two features to determine this extreme kind of competition. Firstly, comparing total R&D costs and their growth rate between companies and markets over time. Exceptional R&D costs in particular fields beyond intuition may be an…Read moreIn the following comment I would like to describe two different markets which show striking characteristics of a “patent race” between several firms. I chose two features to determine this extreme kind of competition. Firstly, comparing total R&D costs and their growth rate between companies and markets over time. Exceptional R&D costs in particular fields beyond intuition may be an indicator for a “patent race”. Secondly, focusing on the scope of litigation after patenting in a competitive market as an “ex post” feature of that contention. One can also assume a positive correlation between that (posterior) indicator and the level and intensity of the respective “patent race”. In Accordance to this my first example involves a high wave of medial perception due to litigation across different countries. Every owner of a smartphone knows the “slide to unlock” function. One has to perform a ‘predefined gesture […] in order to unlock the device’. In October 2011 no one less than Apple was granted a patent, whereas opponents criticized its disproportionate breadth. The medial echo was tremendous, because already in the same year the Swedish company “Neonode” claimed it had lunched that function just before Apples patent application. As a result a court in the Netherlands declared the patent invalid by referring to the approach of prior art. In the following years a lot of European courts e.g. the Federal Patent Court of Germany followed the verdict (here in 2014). After numerous lawsuits the smartphone world aligned as it appears to us nowadays: every producer of smartphone uses the “slide to unlock” function. Apple could ensure the narrow right to be the only one who offers the slide mechanism from the left to the right side. The second example leans to the concept of high R&D costs in competitive markets. The concern which spend the biggest amount in that field the last 5 years ago was the VW group. To become an idea of the dimension – in 2013 the R&D cost were about 11.4 billion US Dollar (USD). Setting this figure in reference to the overall tax revenues of Germany in the same year it is at least 1.5%. It is remarkable that big international automotive manufacturer like Toyota with 9.9 billion USD, Daimler with 6 billion USD and BMW with 5.5 billion USD expenditure for R&D follow this trend. E.g. in Germany the automotive sector comprises 52 % of the expenditure on R&D under the German top companies. Of course the automotive branch involves a vast research intensity but even manager admit that the thirst of patents is especially driven by the striving of hegemony in future technologies which will supply a tremendous market that is called alternative drives. This includes all types of drives beyond the usual gasoline engine, like electronic or hybrid solutions. It is a patent and research race about one of the – or maybe the biggest market in future which automotive companies has spotted and focused. Finally one can raise the question: what are the social welfare maximizing expenditures for R&D? I think this could only be responded individually by every company because it depends on the respective opportunity costs. Furthermore it seems complicate to measure or determine the social optimal R&D expenditure in a specific quantity, because research revenues are uncertain and mostly stretched over a longer period of time. Eventually there should also be a discussion about the part of university research and its funding in the context of real increasing R&D costs of multinational companies. Sources http://www.japanmarkt.de/2014/04/03/fe/forschung/toyota-und-vw-im-patent-und-forschungs-wettlauf/ (in German) http://www.spiegel.de/wissenschaft/mensch/deutsche-firmen-investieren-rekordsumme-in-forschung-a-871448.html (in German) http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=8,046,721.PN.&OS=PN/8,046,721&RS=PN/8,046,721 http://appleinsider.com/articles/13/04/04/apples-slide-to-unlock-patent-invalidated-in-german-litigation Show less Reply Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment You may use simple HTML tags to add links or lists to your comment:<a href="url">link</a> <ul><li>list item 1</li><li>list item2</li></ul> <em>italic</em> <strong>bold</strong>Name * Email * Save my name, email, and website in this browser for the next time I comment. Notify me by email when the comment gets approved.