, SIDE-ISLE 2009 - Fifth Annual Conference

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Technology Adoption and Fuzzy Patent Rights

Jing-Yuan CHIOU

Last modified: 2009-11-23

Abstract


This paper considers why a patent-holder would have low incentives to reduce the uncertainty of patent boundary. Clearer patent rights, i.e., when the patent office examination results are more informative about subsequent court decisions, will provide better guidance to technology-specific investment and encourage technology adoption. Under mild conditions, however, the patent-holder's post-adoption payoff is decreasing in clarity. The patent-holder, then, prefers to maintain "fuzzy" patent rights when she wants to monopolize the use of the technology, or when promoting technology adoption is not a strong concern for her. The latter happens when the patent-holder, as a pure licensor, has a low (ex ante) quality invention. The paper also shows that early licensing can eliminate the patent-holder's efforts to clarify patent boundary without jeopardizing technology adoption. In its absence, however, public decision-makers (the patent office or court) should assume the role to provide certainty of patent rights.

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