Patents, Freedom to Operate, and Follow-on Innovation – Evidence from Post-Grant Opposition

Do patents block follow-on innovation? This question has long divided economists. Some argue that broad patents block access to foundational knowledge, hindering further technological progress. Others counter that the prospect of patent protection provides important incentives to invest in R&D. In this study, we provide empirical evidence to reconcile these opposing views. Leveraging unique data on European patents challenged post-grant, we uncover how the effect of patent invalidation on follow-on innovation critically depends on the value of the underlying innovation. Does patent policy face an impossible trade-off between stimulating breakthrough inventions and enabling cumulative innovation? Our findings suggest it may not.

Publication

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

Partner Institution

Queen Mary University of London