Working Paper: Stricter Patent Regime, Scientist Mobility and Innovation

Author: Madhuparna Ganguly

Title: Stricter Patent Regime, Scientist Mobility and Innovation

Abstract: We model a patent regime in which an innovating firm can partially recover its damage due to scientist movement from the infringing rival. The strength of the patent system, which is a function of litigation success probability and recovery proportion, stipulates expected indemnification. We show that stronger patents fail to reduce the likelihood of infringement and further, decrease the innovation’s expected profitability. Higher potential reparation also reduces the scientist’s expected return on R&D knowledge, entailing greater R&D investment. The expected effects manifest when the market for the new product is moderately competitive. Our results suggest important considerations for patent reforms

Keywords: J60, K40, L11, L13, O34

JEL Code: Competition intensity, Damage rules, Patent strength, Scientist mobility