Prof. Dr. Fabian Gaessler

Artikel in referierten Fachzeitschriften

Gaessler, Fabian; Harhoff, Dietmar; Sorg, Stefan; Graevenitz, Georg von (2024). Patents, Freedom to Operate, and Follow-on Innovation: Evidence from Post-Grant Opposition, Management Science 2024, forthcoming.

• We study the blocking effect of patents on follow-on innovation by others. We posit that follow-on innovation requires freedom to operate (FTO), which firms typically obtain through a license from the patentee holding the original innovation. Where licensing fails, follow-on innovation is blocked unless
  firms gain FTO through patent invalidation. Using large-scale data from post-grant oppositions at the European Patent Office, we find that patent invalidation increases follow-on innovation, measured in citations, by 16% on average. This effect exhibits a U-shape in the value of the original innovation.
  For patents on low-value original innovations, invalidation predominantly increases low-value follow-on innovation outside the patentee’s product market. Here, transaction costs likely exceed the joint surplus of licensing, causing licensing failure. In contrast, for patents on high-value original innovations,
  invalidation mainly increases high-value follow-on innovation in the patentee’s product market. We attribute this latter result to rent dissipation, which renders patentees unwilling to license out valuable technologies to (potential) competitors.
• Also published as: CRC TRR 190 Rationality and Competition Discussion Paper, No. 494

Gaessler, Fabian; Piezunka, Henning (2023). Training with AI ‒ Evidence from Chess Computers, Strategic Management Journal, 44 (11), 2724-2750. DOI

• We suggest that AI can help decision-makers learn; specifically, that it can help them learn strategic interactions by serving as artificial training partners and thus help them to overcome a bottleneck of scarce human training partners. We present evidence from chess computers, the first widespread incarnation of AI. Leveraging the staggered diffusion of chess computers, we find that they did indeed help chess players improve by serving as a substitute for scarce human training partners. We also illustrate that chess computers were not a perfect substitute, as players training with them were not exposed to and thus did not learn to exploit idiosyncratic (“human”) mistakes. We discuss implications for research on learning, on AI in management and strategy, and on competitive advantage.

Brachtendorf, Lorenz; Gaessler, Fabian; Harhoff, Dietmar (2023). Truly Standard-Essential Patents? - A Semantics-Based Analysis, Journal of Economics & Management Strategy, 32 (1), 132-157. DOI

• Standard-essential patents (SEPs) have become a key element of technical coordination via standard-setting organizations. Yet, in many cases, it remains unclear whether a declared SEP is truly standard-essential. To date, there is no automated procedure that allows for a scalable and objective assessment of SEP status. This paper introduces a semantics-based method for approximating the standard essentiality of patents. We provide details on the procedure that generates the measure of standard essentiality and present the results of several validation and robustness exercises. We illustrate the measure's usefulness in estimating the share of true SEPs in firm patent portfolios for several telecommunication standards.
• Also published as: CEPR Discussion Paper DP14726

Gaessler, Fabian; Hall, Bronwyn H.; Harhoff, Dietmar (2021). Should There Be Lower Taxes on Patent Income?, Research Policy 50. DOI

• A “patent box” is a term for the application of a lower corporate tax rate to the income derived from the ownership of patents. This tax subsidy instrument has been introduced in a number of countries since 2000. Using comprehensive data on patents filed at the European Patent Office, including information on ownership transfers pre- and post-grant, we investigate the impact of the introduction of a patent box on international patent transfers, on the choice of ownership location, and on innovative activity in the relevant country. We find that the impact on transfers is small but present, especially when the tax instrument does not contain a development condition and for high value patents (those most likely to have generated income), but that innovation as proxied by R&D and patents is not affected. We also find that introducing a patent box reduces patent transfers out of the country. These results call into question whether the patent box is an effective instrument for encouraging innovation in a country, rather than simply preventing or facilitating the shifting of corporate income to low tax jurisdictions.
• Also published as Max Planck Institute for Innovation & Competition Research Paper No. 18-18

Gaessler, Fabian; Wagner, Stefan (2020). Patents, Data Exclusivity, and the Development of New Drugs, The Review of Economics and Statistics 2020. DOI

• Pharmaceutical firms typically enjoy market exclusivity for new drugs from concurrent protection of the underlying invention (through patents) and the clinical trials data submitted for market approval (through data exclusivity). Patent invalidation during drug development renders data exclusivity the sole source of protection and shifts the period of market exclusivity at the project level. Patent invalidation therefore constitutes a natural experiment that allows us to causally identify how the duration of market exclusivity affects firms' incentives to innovate. In instrumental variables regressions we quantify the effect of a one-year reduction in expected market exclusivity on the likelihood of drug commercialization. We provide first estimates of the responsiveness of R&D investments to market exclusivity expectations and hereby inform the ongoing policy debate on the regulation of intellectual property rights in the pharmaceutical industry.
• Also published as CRC Discussion Paper No. 176
• Also published at SSRN

Baruffaldi, Stefano Horst; Byrski, Dennis; Gaessler, Fabian (2020). Fire and Mice: The Effect of Supply Shocks on Basic Science, Academy of Management Proceedings, 2020 (1). DOI

• We study how a negative supply shock to research-related assets affects the production of scientific knowledge. In particular, we exploit the 1989 Morrell Park fire that destroyed a considerable share of the world's largest mice breeding facility, the Jackson Laboratory, and killed approximately 400,000 mice. This fire led to an unforeseen and substantial supply shortage in mice for the North American biomedical research community, which we can isolate at the strain and scientist level based on proprietary archival data. Using difference-in-differences estimations, we find that the scientific productivity of affected scientists decreases when measured in simple publication counts, but much less so when we adjust for the publications' quality. Moreover, affected researchers are more likely to initiate research that is unrelated to their previous work. This indicates that affected scientists switched research trajectories but maintained their scientific impact. In the aggregate, the temporary supply shortage of particular mice strains led to a permanent decrease in their usage among U.S.\ scientists. These results highlight the important role of supply chains in basic science."

Dorner, Matthias; Gaessler, Fabian; Harhoff, Dietmar; Hoisl, Karin; Poege, Felix (2020). Filling the Gap - Firm Strategies for Human Capital Loss, Academy of Management Annual Meeting Proceedings, 2020 (1), 2020 (1)71. DOI

• This paper explores how the premature death of an inventor affects the productivity and career trajectories of co-inventors. To this end, we develop and analyze a dataset covering the careers of 152,350 German inventors. The data combine highly precise employer-employee data from official social security registers with patent office information covering the period from 1980-2014. Departing from 799 registered premature deaths of inventors and the same number of matched inventors, we study how co-inventors were affected by the death of their peers. Using a difference-in-differences and an event study design, we investigate the reaction of the co-inventors' patenting activities, career advancement and job mobility. Using a number of measures and robustness checks, our results show that the premature death of a co-inventor reduces the productivity of the surviving co-inventors. The effect sets in immediately and survivors do not seem to recover from the shock in the five years following. We argue that employers will seek to retain co-inventors under certain conditions in order to continue lines of research and invention. The empirical results confirm our expectations: surviving inventors are significantly less likely to move to a different employer and are more likely to be promoted compared to inventors in the control group. These effects seem to diminish after about two years."

Poege, Felix; Harhoff, Dietmar; Gaessler, Fabian; Baruffaldi, Stefano Horst (2019). Science Quality and the Value of Inventions, Science Advances, 5 (12), eaay7323. DOI

• Despite decades of research, the relationship between the quality of science and the value of inventions has remained unclear. We present the result of a large-scale matching exercise between 4.8 million patent families and 43 million publication records. We find a strong positive relationship between quality of scientific contributions referenced in patents and the value of the respective inventions. We rank patents by the quality of the science they are linked to. Strikingly, high-rank patents are twice as valuable as low-rank patents, which in turn are about as valuable as patents without direct science link. We show this core result for various science quality and patent
  value measures. The effect of science quality on patent value remains relevant even when science is linked indirectly through other patents. Our findings imply that what is considered “excellent” within the science sector also leads to outstanding outcomes in the technological or commercial realm.
• Also published as: arXiv preprint 1903.05020
• Article: Excellence Breeds Invention, Research Europe 510 (2020), 11

Contreras, Jorge L.; Gaessler, Fabian; Helmers, Christian; Love, Brain J. (2018). Litigation of Standards-essential Patents in Europe – A Comparative Analysis, Berkeley Technology Law Journal, 32 (4), 1457-1488.

Gaessler, Fabian; Harhoff, Dietmar; Sorg, Stefan (2017). Patents and Cumulative Innovation – Evidence from Post-Grant Patent Oppositions, Academy of Management Proceedings, 2017 (1). DOI

• Using large-scale data on opposition to patents at the European Patent Office (EPO), we investigate the causal effect of a patent’s invalidation on follow-on inventions. We introduce a new instrumental variable exploiting the participation or absence of the patent examiner in the opposition proceeding. According to our baseline model, patent invalidation leads to a highly significant and sizable increase of forward citations. While this is in line with previous studies, disentangling the effect leads us to results that stand in stark contrast to some of the literature. We find that the effects are most pronounced for patents in discrete technology areas, for areas where patent thickets are absent and for patents which are not protected by ""patent fences"". Moreover, the effect is particularly strong for relatively small patent holders facing comparatively small follow-on innovators.

Cremers, Katrin; Ernicke, Max; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian; McDonagh, Luke; Schliessler, Paula; van Zeebroeck, Nicolas (2017). Patent Litigation in Europe, European Journal of Law and Economics, 44 (1), 1-44. DOI

• We compare patent litigation cases across four European jurisdictions—Germany, the UK (England and Wales), France, The Netherlands—using case-level data gathered from cases filed in the four jurisdictions during the period 2000–2008. Overall, we find substantial differences across jurisdictions in terms of caseloads—notably, courts in Germany hear by far the largest number of cases, not only in absolute terms, but also when taking macro-economic indicators into account—and we further find important cross-country variances in terms of case outcomes. Moreover, we show empirically that a considerable number of patents are litigated across multiple European jurisdictions; and further, that in the majority of these cases divergent case outcomes are reached across the different jurisdictions, suggesting that the long-suspected problem of inconsistency of decision-making in European patent litigation is in fact real. Finally, we note that the coming into force of the Unified Patent Court in Europe may, in the long term, help to alleviate this inconsistency problem.
• Also published as: ZEW Discussion Paper No. 13-072

Cremers, Katrin; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian; Lefouili, Yassine (2016). Invalid but Infringed? An Analysis of the Bifurcated Patent Litigation System, Journal of Economic Behavior & Organization, 131 (PA), 218-242. DOI

• In bifurcated patent litigation systems, claims of infringement and validity of a patent are decided independently of each other in separate court proceedings at different courts. In non-bifurcated systems, infringement and validity are decided jointly in the same proceedings at a single court. We build a model that shows the key trade-off between bifurcated and non-bifurcated systems and how it affects the incentives of plaintiffs and defendants in patent infringement cases. Using detailed data on patent litigation cases in Germany (bifurcated) and the U.K. (non-bifurcated), we show that bifurcation creates situations in which a patent is held infringed that is subsequently invalidated. We also show that having to challenge a patent's validity in separate court proceedings under bifurcation implies that alleged infringers are less likely to do so. We find this to apply in particular to more resource-constrained alleged infringers. Finally, we find parties to be more likely to settle in a bifurcated system.
• Also published as Max Planck Institute for Innovation & Competition Research Paper No. 14-14
• Also published as ZEW - Centre for European Economic Research Discussion Paper No. 14-072

Herausgeberwerke

Romandini, Roberto; Kur, Annette; Walz, Axel; Valtere, Laura; Slowinski, Peter R.; Wright, Gordon; Gaessler, Fabian; Batista, Pedro Henrique D.; Byrski, Dennis; Fischer, Marius; Rivas, Victoria (2018). Study on the legal aspects of Supplementary Protection Certificates in the EU. Final report. Brussel: European Commission. DOI

Beiträge in Sammelwerken

Gaessler, Fabian; Byrski, Dennis (2018). Section 16.2 - Duration of the SPC (Art. 13 Reg. 469/2009) - Effective length of SPC protection, in: Roberto Romandini, Reto M. Hilty, Annette Kur (Hg.), Study on the Legal Aspects of Supplementary Protection Certificates in the EU - Final Report, 378-379. Brussels: European Commission.

Slowinski, Peter R.; Romandini, Roberto; Gaessler, Fabian; Byrski, Dennis (2018). Chapter 16 - Duration of the SPC (Art. 13 Reg. 469/2009), in: Roberto Romandini, Reto M. Hilty, Annette Kur (Hg.), Study on the Legal Aspects of Supplementary Protection Certificates in the EU - Final Report, 377-385. Brussels: European Commission.

Byrski, Dennis; Gaessler, Fabian (2018). Annex V - SPC Statistics to Chapter 7, in: Roberto Romandini, Reto M. Hilty, Annette Kur (Hg.), Study on the Legal Aspects of Supplementary Protection Certificates in the EU - Final Report, 1-16. Brussels: European Commission.

Romandini, Roberto; Gaessler, Fabian; Byrski, Dennis (2018). Chapter 7 - Overall Use of the SPC System in the EU, in: Roberto Romandini, Reto M. Hilty, Annette Kur (Hg.), Study on the Legal Aspects of Supplementary Protection Certificates in the EU - Final Report, 91-105. Brussels: European Commission.

Love, Brian J.; Helmers, Christian; Gaessler, Fabian; Ernicke, Maximilian (2017). Patent Assertion Entities in Europe, in: D. Daniel Sokol (Hg.), Patent Assertion Entities and Competition Policy, 104-129. Cambridge: Cambridge University Press.

• This book chapter presents the findings of an empirical study of U.K. and German patent litigation involving patent assertion entities (PAEs). Overall, we find that PAEs account for roughly ten percent of patent suits filed in these countries during the time periods covered by our study: 2000-2013 for the UK and 2000-2008 for Germany. We also present a variety of additional data on the characteristics of European PAE suits and PAE-asserted patents and, finally, consider what our findings suggest are the most important reasons PAEs tend to avoid European courts. We conclude that, while many factors likely contribute to the relative scarcity of PAEs in Europe, the continent’s fee-shifting regimes stand out as a key deterrent to patent monetization.
• Also published at SSRN

Andere Veröffentlichungen, Presseartikel, Interviews

Danzer, Alexander M.; Feuerbaum, Carsten; Gaessler, Fabian (2020). Beeinflusst das Arbeitsangebot Automatisierungsinnovation?, Ökonomenstimme 2020.

• https://www.oekonomenstimme.org/artikel/2020/10/beeinflusst-das-arbeitsangebot-automatisierungsinnovation/

Poege, Felix; Harhoff, Dietmar; Gaessler, Fabian; Baruffaldi, Stefano Horst (2020). Excellence Breeds Invention. The Most Highly Cited Papers Feature in the Most Valuable Patents, Research Europe, (510), 11.

• Article "Science Quality and the Value of Inventions" in Science Advances, Vol. 5 (2019) No. 12, eaay7323
• More detailed online version of the article in Research Europe, which was the basis for the printed article.

Brachtendorf, Lorenz; Gaessler, Fabian; Harhoff, Dietmar (2020). Approximating the Standard Essentiality of Patents – A Semantics-Based Analysis, Report for the EPO Academic Research Programme.

Monographien

Gaessler, Fabian (2016). Enforcing and Trading Patents – Evidence for Europe (Innovation und Entrepreneurship). Wiesbaden: Springer Gabler. DOI

Diskussionspapiere

Gaessler, Fabian; Harhoff, Dietmar; Sorg, Stefan; Graevenitz, Georg von (2024). Patents, Freedom to Operate, and Follow-on Innovation: Evidence from Post-Grant Opposition, CRC TRR 190 Rationality and Competition Discussion Paper, No. 494.

• We study the blocking effect of patents on follow-on innovation by others. We posit that follow-on innovation requires freedom to operate (FTO), which firms typically obtain through a license from the patentee holding the original innovation. Where licensing fails, follow-on innovation is blocked unless
  firms gain FTO through patent invalidation. Using large-scale data from post-grant oppositions at the European Patent Office, we find that patent invalidation increases follow-on innovation, measured in citations, by 16% on average. This effect exhibits a U-shape in the value of the original innovation.
  For patents on low-value original innovations, invalidation predominantly increases low-value follow-on innovation outside the patentee’s product market. Here, transaction costs likely exceed the joint surplus of licensing, causing licensing failure. In contrast, for patents on high-value original innovations,
  invalidation mainly increases high-value follow-on innovation in the patentee’s product market. We attribute this latter result to rent dissipation, which renders patentees unwilling to license out valuable technologies to (potential) competitors.
• https://rationality-and-competition.de/wp-content/uploads/discussion_paper/494.pdf
• Forthcoming in: Management Science

Byrski, Dennis; Gaessler, Fabian; Higgins, Matthew John (2023). Market Size and Research: Evidence from the Pharmaceutical Industry, NBER Working Paper, No. w28858.

• Prior literature has established a link between changes in market size and pharmaceutical innovation; whether a link exists with scientific research remains an open question. If upstream research is not responsive to these changes, the kinds of scientific discoveries that flow into future drug development could be disconnected from downstream demand. We explore this question by exploiting the effects of quasi-experimental variation in market size introduced by Medicare Part D. We find no causal relationship between market size and biomedical research in the decade following the implementation of Medicare Part D. While many factors have been shown to motivate scientists to conduct research, this result suggests that changes in market size provide no such incentive. We do find, however, limited support for a response by corporate scientists conducting applied research. Implications for pharmaceutical innovation policy are discussed.
• Available at SSRN
• Also published as Max Planck Institute for Innovation & Competition Research Paper No. 21-16

Poege, Felix; Gaessler, Fabian; Hoisl, Karin; Harhoff, Dietmar; Dorner, Matthias (2022). Filling the Gap: The Consequences of Collaborator Loss in Corporate R&D, Max Planck Institute for Innovation & Competition Research Paper, No. 22-17.

• We examine how collaborator loss affects knowledge workers in corporate R&D. We argue that such a loss affects the remaining collaborators not only by reducing their team-specific capital (as argued in the prior literature) but also by increasing their bargaining power over the employer, who is in need of filling the gap left by the lost collaborator to ensure the continuation of R&D projects. This shift in bargaining power may, in turn, lead to benefits, such as additional resources or more attractive working conditions. These benefits can partially compensate for the negative effect of reduced team-specific capital on productivity and influence the career trajectories of the remaining collaborators. We empirically investigate the consequences of collaborator loss by exploiting 845 unexpected deaths of active inventors. We find that inventor death has a moderate negative effect on the productivity of the remaining collaborators. This negative effect disappears when we focus on the remaining collaborators who work for the same employer as the deceased inventor. Moreover, this group is more likely to be promoted and less likely to leave their current employer.
• Available at SSRN

Baruffaldi, Stefano Horst; Gaessler, Fabian (2021). The Returns to Physical Capital in Knowledge Production: Evidence from Lab Disasters, Max Planck Institute for Innovation & Competition Research Paper, No. 21-19. DOI

• We establish the importance of physical capital in knowledge production. To this end, we exploit adverse events (explosions, fires, floods, etc.) at research institutions as exogenous physical capital shocks. Scientists experience a substantial and persistent reduction in research output if they lose specialized physical capital, that is, equipment and material they created over time for a particular research purpose. In contrast, they quickly recover if they only lose generic physical capital. Affected scientists in older laboratories, which presumably lose more obsolete physical capital, are more likely to change their direction of research and recover in scientific productivity. These findings suggest that a scientist's investments into their own physical capital yield lasting returns but also create path dependence in relation to research direction.

Byrski, Dennis; Gaessler, Fabian; Higgins, Matthew John (2021). Market Size and Research: Evidence from the Pharmaceutical Industry, Max Planck Institute for Innovation & Competition Research Paper, No. 21-16.

• Prior literature has established a link between changes in market size and pharmaceutical innovation; whether a link exists with scientific research remains an open question. If upstream research is not responsive to these changes, the kinds of scientific discoveries that flow into future drug development could be disconnected from downstream demand. We explore this question by exploiting the effects of quasi-experimental variation in market size introduced by Medicare Part D. We find no causal relationship between market size and biomedical research in the decade following the implementation of Medicare Part D. While many factors have been shown to motivate scientists to conduct research, this result suggests that changes in market size provide no such incentive. We do find, however, limited support for a response by corporate scientists conducting applied research. Implications for pharmaceutical innovation policy are discussed.
• Available at SSRN
• Also published as NBER Working Paper No. w28858

Danzer, Alexander M.; Feuerbaum, Carsten; Gaessler, Fabian (2020). Labor Supply and Automation Innovation, CESifo Working Paper, No. 8410.

• While economic theory suggests substitutability between labor and capital, little evidence exists regarding the causal effect of labor supply on inventing labor-saving technologies. We analyze the impact of exogenous changes in regional labor supply on automation innovation by exploiting an immigrant placement policy in Germany during the 1990s and 2000s. Difference-in-differences estimates indicate that one additional worker per 1,000 manual and unskilled workers reduces automation innovation by 0.05 patents. The effect is most pronounced two years after immigration and confined to industries containing many low-skilled workers. Labor market tightness and external demand are plausible mechanisms for the labor-innovation nexus.
• Available at SSRN
• Also published as: Max Planck Institute for Innovation & Competition Research Paper No. 20-09
• Also published as: IZA Discussion Paper No. 13429

Danzer, Alexander M.; Feuerbaum, Carsten; Gaessler, Fabian (2020). Labor Supply and Automation Innovation, Max Planck Institute for Innovation & Competition Research Paper, No. 20-09.

• While economic theory suggests substitutability between labor and capital, little evidence exists regarding the causal effect of labor supply on inventing labor-saving technologies. We analyze the impact of exogenous changes in regional labor supply on automation innovation by exploiting an immigrant placement policy in Germany during the 1990s and 2000s. Difference-in-differences estimates indicate that one additional worker per 1,000 manual and unskilled workers reduces automation innovation by 0.05 patents. The effect is most pronounced two years after immigration and confined to industries containing many low-skilled workers. Labor market tightness and external demand are plausible mechanisms for the labor-innovation nexus.
• Available at SSRN
• Also published as: IZA DP No. 13429
• Also published as: CESifo Working Paper No. 8410

Brachtendorf, Lorenz; Gaessler, Fabian; Harhoff, Dietmar (2020). Truly Standard-Essential Patents? - A Semantics-Based Analysis, CEPR Discussion Paper, 14726. London: Centre for Economic Policy Research.

• Standard-essential patents (SEPs) have become a key element of technical coordination in standard-setting organizations. Yet, in many cases, it remains unclear whether a declared SEP is truly standard-essential. To date, there is no automated procedure that allows for a scalable and objective assessment of SEP status. This paper introduces a semantics-based method for approximating the standard essentiality of patents. We provide details on the procedure that generates the measure of standard essentiality and present the results of several validation exercises. In a first empirical application we illustrate the measure's usefulness in estimating the share of true SEPs in firm patent portfolios for several mobile telecommunication standards. We find firm-level differences that are statistically significant and economically substantial. Furthermore, we observe a general decline in the average share of presumably true SEPs between successive standard generations.
• https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14726
• Also published in: Journal of Economics & Management Strategy

Danzer, Alexander M.; Feuerbaum, Carsten; Gaessler, Fabian (2020). Labor Supply and Automation Innovation, IZA DP, No. 13429. Bonn: IZA – Institute of Labor Economics.

• While economic theory suggests substitutability between labor and capital, little evidence exists regarding the causal effect of labor supply on inventing labor-saving technologies. We analyze the impact of exogenous changes in regional labor supply on automation innovation by exploiting an immigrant placement policy in Germany during the 1990s and 2000s. Difference-in-differences estimates indicate that one additional worker per 1,000 manual and unskilled workers reduces automation innovation by 0.05 patents. The effect is most pronounced two years after immigration and confined to industries containing many low-skilled workers. Labor market tightness and external demand are plausible mechanisms for the labor-innovation nexus.
• https://www.iza.org/de/publications/dp/13429/labor-supply-and-automation-innovation
• Also published as: Max Planck Institute for Innovation & Competition Research Paper No. 20-09
• Also published as: CESifo Working Paper No. 8410

Gaessler, Fabian; Harhoff, Dietmar; Sorg, Stefan (2019). Bargaining Failure and Freedom to Operate: Re-Evaluating the Effect of Patents on Cumulative Innovation, Max Planck Institute for Innovation & Competition Research Paper, No. 19-11. DOI

• Also published as: CEPR Discussion Paper 13969

Gaessler, Fabian; Harhoff, Dietmar; Sorg, Stefan (2019). Bargaining Failure and Freedom to Operate: Re-evaluating the Effect of Patents on Cumulative Innovation, CEPR Discussion Paper, 13969.

• We investigate the causal effect of patent rights on cumulative innovation, using large-scale data that approximate the patent universe in its technological and economic variety. We introduce a novel instrumental variable for patent invalidation that exploits personnel scarcity in post-grant opposition at the European Patent Ofï¬ ce. We ï¬ nd that patent invalidation leads to a highly signiï¬ cant and sizeable increase of follow-on inventions. The effect is driven by cases where the removal of the individual exclusion right creates substantial freedom to operate for third parties. Importantly, our results suggest that bargaining failure between original and follow-on innovators is not limited to environments commonly associated with high transaction costs.
• https://ideas.repec.org/p/cpr/ceprdp/13969.html
• Also published as: Max Planck Institute for Innovation & Competition Research Paper No. 19-11

Gaessler, Fabian; Wagner, Stefan (2019). Patents, Data Exclusivity, and the Development of New Drugs, CRC Discussion Paper, No. 176.

• Pharmaceutical firms typically enjoy market exclusivity for new drugs from concurrent protection of the underlying invention (through patents) and the clinical trials data submitted for market approval (through data exclusivity). Patent invalidation during drug development renders data exclusivity the
  sole source of protection and shifts the period of market exclusivity at the project level. In instrumental variables regressions we quantify the effect of a one-year reduction in expected market exclusivity on the
  likelihood of drug commercialization. The effect is largely driven by patent invalidations early in the drug development process and by the responses of large originators. We hereby provide first estimates of the responsiveness of R&D investments to market exclusivity expectations.
• https://rationality-and-competition.de/wp-content/uploads/discussion_paper/176.pdf
• Also published at SSRN
• Published in: The Review of Economics and Statistics (2022) 104 (3), pp. 571–586.

Poege, Felix; Harhoff, Dietmar; Gaessler, Fabian; Baruffaldi, Stefano Horst (2019). Science Quality and the Value of Inventions, arXiv preprint 1903.05020.

• Despite decades of research, the relationship between the quality of science and the value of inventions has remained unclear. We present the result of a large-scale matching exercise between 4.8 million patent families and 43 million publication records. We find a strong positive relationship between quality of scientific contributions referenced in patents and the value of the respective inventions. We rank patents by the quality of the science they are linked to. Strikingly, high-rank patents are twice as valuable as low-rank patents, which in turn are about as valuable as patents without direct science link. We show this core result for various science quality and patent
  value measures. The effect of science quality on patent value remains relevant even when science is linked indirectly through other patents. Our findings imply that what is considered “excellent” within the science sector also leads to outstanding outcomes in the technological or commercial realm.
• https://arxiv.org/pdf/1903.05020.pdf
• Also published in Science Advances 2019, Vol. 5, No. 12, eaay7323

Gaessler, Fabian; Hall, Bronwyn H.; Harhoff, Dietmar (2019). Should There Be Lower Taxes on Patent Income?, CRC Discussion Paper (CRC/TR 190 Rationality and Competition), No. 177.

• A "patent box" is a term for the application of a lower corporate tax rate to the income derived from the ownership of patents. This tax subsidy instrument has been introduced in a number of countries since 2000. Using comprehensive data on patents filed at the European Patent Office, including information on ownership transfers pre- and post-grant, we investigate the impact of the introduction of a patent box on international patent transfers, on the choice of ownership location, and on invention in the relevant country. We find that the impact on transfers is small but present, especially when the tax instrument contains a development condition and for high value patents (those most likely to have generated income), but that invention itself is not affected. This calls into question whether the patent box is an effective instrument for encouraging innovation in a country, rather than simply facilitating the shifting of corporate income to low tax jurisdictions.
• https://rationality-and-competition.de/wp-content/uploads/discussion_paper/177.pdf
• Also published as Max Planck Institute for Innovation & Competition Research Paper No. 18-18
• Published in: Research Polic, Volume 50, Issue 1, January 2021, 104129

Ciaramella, Laurie; Gaessler, Fabian; Hall, Bronwyn H.; Harhoff, Dietmar (2019). Patent Transfers and Patent Citations, HAL archives ouvertes, No. hal-02307096.

Gaessler, Fabian; Hall, Bronwyn H.; Harhoff, Dietmar (2018). Should There Be Lower Taxes on Patent Income?, Max Planck Institute for Innovation & Competition Research Paper, No. 18-18.

• A “patent box” is a term for the application of a lower corporate tax rate to the income derived from the ownership of patents. This tax subsidy instrument has been introduced in a number of countries since 2000. Using comprehensive data on patent filings at the European Patent Office, including information on ownership transfers pre‐ and post‐grant, we investigate the impact of the introduction of a patent box on international patent transfers, on the choice of ownership location, and on invention in the relevant country. We find that the impact on transfers is small but present, especially when the tax instrument contains a development condition and for high value patents (those most likely to have generated income), but that invention itself is not affected. This calls into question whether the patent box is an effective instrument for encouraging innovation in a country, rather than simply facilitating the shifting of corporate income to low tax jurisdictions.
• Available at SSRN
• Also published as: NBER Working Paper No. w24843
• Also published as CRC Discussion Paper No. 177
• Also published in: Research Policy Volume 50, Issue 1, January 2021, 104129

Gaessler, Fabian; Pu, Zhaoxin (2018). Openness as Platform Strategy - Evidence from a Quasi-Experiment in Crowdfunding, Max Planck Institute for Innovation & Competition Research Paper, No. 18-05. DOI

• A platform's decision to open up its marketplace is at the core of its business strategy. It needs to balance between the benefits of market thickness and the costs of potential congestion and quality concerns. We discuss how openness can increase platform value and test our hypotheses by analyzing the strategic decision of a leading crowdfunding platform to switch from access control to de facto openness. The decision increased market thickness on the previously access-controlled supply side of crowdfunding projects. The platform hereby gained market share from its main competitor. Market matches on the platform increased in absolute but not in relative terms. Moreover, quality on the supply side declined immediately, lowering platform value for demand-side users.
• Available at SSRN

Dorner, Matthias; Harhoff, Dietmar; Gaessler, Fabian; Hoisl, Karin; Poege, Felix (2018). Linked Inventor Biography Data 1980-2014, FDZ Data Report, No. 03/2018.

• This data report describes the Linked Inventor Biography Data 1980-2014 (INV-BIO ADIAB 8014), its generation using record linkage and machine learning methods as well as how to access the data via the FDZ.
• Dieser Datenreport beschreibt die verknüpften Erfinderbiografiedaten 1980-2014 (INV-BIO ADIAB 8014), deren Erstellung mittels Record Linkage und Machine Learning Methoden sowie den Datenzugang über das FDZ.
• http://doku.iab.de/fdz/reporte/2018/DR_03-18_EN.pdf

Gaessler, Fabian; Lefouili, Yassine (2017). What to Buy When Forum Shopping? Analyzing Court Selection in Patent Litigation, TSE Working Paper, No. 17-775. DOI

• This paper examines court selection by plaintiffs in patent litigation. We build a forum shopping model that provides a set of predictions regarding plaintiffs’ court preferences, and the way these preferences depend on the market proximity between the plaintiff and the defendant. Then, using a rich dataset of patent litigation at German regional courts between 2003 and 2008, we estimate the determinants of court selection with alternative-specific conditional logit models. In line with our theoretical predictions, our empirical results show that plaintiffs prefer courts that have shorter proceedings, especially when they compete against the defendants they face. Further, we find negative effects of the plaintiff’s, as well as the defendant’s, distance to court on the plaintiff’s court selection. Our empirical analysis also allows us to infer whether plaintiffs perceive a given court as more or less pro-patentee than another one.

Cremers, Katrin; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian (2014). Invalid But Infringed? An Analysis of Germany's Bifurcated Patent Litigation System, ZEW - Centre for European Economic Research Discussion Paper, No. 14-072. DOI

• We analyze the impact of the probabilistic nature of patents on the functioning of Germany’s bifurcated patent litigation system where infringement and validity of a patent are decided independently by different courts. We show that bifurcation creates situations in which a patent is held infringed that is subsequently invalidated. Our conservative estimates indicate that 12% of infringement cases in which the patent’s validity is challenged produce such ‘invalid but infringed’ decisions. We also show that having to challenge a patent’s validity in separate court proceedings means that more resource-constrained alleged infringers are less likely to do so. We find evidence that ‘invalid but infringed’ decisions create uncertainty which firms that were found to infringe an invalid patent attempt to reduce by filing more oppositions against newly granted patents immediately afterwards.
• Also published as: Journal of Economic Behavior & Organization Volume 131, Part A, November 2016, 218-242
• Also published as Max Planck Institute for Innovation & Competition Research Paper No. 14-14

Cremers, Katrin; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian (2014). Invalid But Infringed? An Analysis of Germany's Bifurcated Patent Litigation System, Max Planck Institute for Innovation & Competition Research Paper, No. 14-14. DOI

• We analyze the impact of the probabilistic nature of patents on the functioning of Germany’s bifurcated patent litigation system where infringement and validity of a patent are decided independently by different courts. We show that bifurcation creates situations in which a patent is held infringed that is subsequently invalidated. Our conservative estimates indicate that 12% of infringement cases in which the patent’s validity is challenged produce such ‘invalid but infringed’ decisions. We also show that having to challenge a patent’s validity in separate court proceedings means that more resource-constrained alleged infringers are less likely to do so. We find evidence that ‘invalid but infringed’ decisions create uncertainty which firms that were found to infringe an invalid patent attempt to reduce by filing more oppositions against newly granted patents immediately afterwards.
• Also published in Journal of Economic Behavior & Organization Volume 131, Part A, 2016, 218 - 242
• Also published as ZEW - Centre for European Economic Research Discussion Paper No. 14-072

Cremers, Katrin; Ernicke, Max; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian; McDonagh, Luke; Schliessler, Paula; van Zeebroeck, Nicolas (2013). Patent Litigation in Europe, ZEW Discussion Paper, No. 13-072.

• We compare patent litigation cases across four European jurisdictions – Germany, France, the Netherlands, and the UK – covering cases filed during the period 2000-2008. For our analysis, we assemble a new dataset that contains detailed information at the case, litigant, and patent level for patent cases filed at the major courts in the four jurisdictions. We find substantial differences across jurisdictions in terms of case loads. Courts in Germany hear by far the largest number of cases in absolute terms, but also when taking country size into account. We also find important between-country differences in terms of outcomes, the share of cases that is appealed, as well as the characteristics of litigants and litigated patents. A considerable number of patents are litigated in multiple jurisdictions, but the majority of patents are subject to litigation only in one of the four jurisdictions.
• http://ftp.zew.de/pub/zew-docs/dp/dp13072.pdf
• Also published in European Journal of Law and Economics, August 2017, Volume 44, Issue 1, 1–44