Chapter 9 : Protecting Innovation

Question 1

Appropriability

Answer 1

The degree to which a firm is able to capture the rents from its innovation

determined by how easily competitors can imitate the innovation & the strength of the chosen protective mechanism.
- difficult to copy : tacit, socially complex

Question 2

Patents

Answer 2

property rights granted by the government that exclude others from producing, using, or selling an invention in the country in which the patent is issued,
for a limited time.
•1) usefulness, 2) novelty and 3) obviousness.

Question 3

Utility patents
Design patents
Plant patents

Answer 3

1) protect new and useful processes, machines, manufactured items or combination of materials
2) protect original and ornamental designs for manufactured items
3) protect distinct new varieties of plants.

Question 4

Paris Convention for the Protection of Industrial Property

Answer 4

• Foreign nationals and citizens have the same rights.
• Right of “priority”
• Eliminates barriers to patenting inventions previously
  revealed by public disclosure.

Question 5

Patent Cooperation Treaty (PCT)

Answer 5

Single application valid in all countries and the inventor has 2 1⁄2 years to file in other signatory countries.

Question 6

Patent strategies

Answer 6

• Blocking others from selling the product so that the
  firm can be the sole provider;
• Licensing the technology to others;
• Selling the patent rights to another firm that can
  better utilize the technology
• Limit the options of competitors, or to earn revenues
  through aggressive patent lawsuits
  ( ‘patent trolling’ )

Question 7

Trademarks & Service marks

Answer 7

A word, phrase, symbol, design, or other indicator that is used to distinguish the source of goods form one party from goods of another

( Madrid Union treaties simplify registration of trademarks in multiple countries.)

Question 8

The Effectiveness & use of protection mechanisms

Answer 8

• Legal protection mechanisms are more effective in some industries than others
• Difficult to protect manufacturing processes and techniques
• Diffusing a technology may be more valuable than protecting it (sometimes)
• Once control is relinquished it is difficult to reclaim

Question 9

Advantages of Protection

Answer 9

• greater rent appropriability
• Rents can be used to invest in further development,
  promotion, and distribution.
• Give the firm control over the evolution of the technology and complements.

Question 10

Advantages of Diffusion

Answer 10

• More rapid adoptions if produced and promoted by
  multiple firms.
• Technology might be improved by other firms (though
  external development poses its own risks).