Events

Max Planck Institute for Innovation and Competition, Munich, Room 313

This paper seeks to investigate to what extent European patent litigation has been harmonized across the Member States of the European Patent Convention. We introduce a divergent expectation model for patent infringement disputes, where both litigation and settlement are driven by patent quality, a function of both broadness and definiteness of the patent, with the technology-specific factor determining the relative weights. Under our model, patent holders and patent infringers decide whether to settle or litigate based on differences in perception of the patent's quality whereas at the trial stage it is the assessment of the absolute patent quality by the judge which decides the outcome of the case. We evaluate 1117 patent infringement and counterclaim decisions rendered by courts in the three largest patent-granting European countries - Germany, France, and the United Kingdom - between 2008 and 2012 to empirically test the hypotheses flowing from our model at the trial stage. Our preliminary findings point to significant differences in patent litigation outcomes by technology, industry, and jurisdiction. We particularly find evidence that patent litigation is technology-specific within and between countries. We seek to explain our results through an assessment of the value-specific patterns of the patent conflicts and thereby, find that the patent quality proxy we use significantly predicts the litigation outcome. (Authors: Raphael Zingg/Erasmus Elsner)

Contact person: Dr. Fabian Gaessler

Max Planck Institute for Innovation and Competition, Munich, Room E10

Product positioning decisions are important strategic decisions managers make. Will the firm develop "high-end" products, priced above the average product in the marketplace or "low-end" products, priced lower than the average product in the market? We theorize and empricially investigate a high-end bias: the tendency to favor high-end over low-end projects in the absence of objective reasons for doing so. We conducted experimental investigations of managers' explicit versus implicit preferences for high- versus low-end. The core of these experimental studies is the Implicit Association Test (IAT), which analyzes the relative association strength between two constructs in the participant's mind. We find that (1) decision makers implicitly, and without objective justification, prefer high-end over low-end innovation projects, (2) decision maker's implicit high-end bias affects their explicit decisions, and (3) firms introduce more high-end than low-end innovations despite no advantage in revenue.

Contact Person: Dr. Fabian Gaessler

Abstract:

In this paper I analyze spillover effects on the production of patents following episodes in which superstar inventors relocate to a new city. In particular, in order to distinguish whether local externalities have a restricted network dimension or a wider spatial breadth, I estimate changes in patterns of patenting activity for two different groups of inventors: the restricted group of coauthors of the superstar, and all other inventors in one urban area.

The analysis is performed for both the locality where the superstar moves and the one that is left. I restrict the attention to patent outputs that exclude any joint work with the superstar, so to isolate spillovers from complementarity effects.

The results from the event study evidence a large and persistent positive effect on the coauthors of the superstar who reside in the city of destination (averaging about 0.1 more patents per inventor each year), and a negative trend affecting those who live in the locality of departure. Conversely, no city-wide spillover effect can be attested, offering little support to place-based policies aimed at generating a positive local brain drain.

Contact person: Dr. Fabian Gaessler

Both organizational and sociological approaches in entrepreneurship research highlight the importance of social context ins haping individual preferences for entrepreneurship. An influential contextual factor that has not been studied in entrepreneurship research is one's boss at work. Do entrepreneurial bosses contribute to their employees' decisions to become entrepreneurs themselves? Using Danish register data of newly founded firms and their entrepreneurs and employees between 2003 and 2012, and employing methods that allow causal inferences, we show that entrepreneurial bosses indeed affect their employees' future entrepenruship choices, especially if both boss and employees are female. We investigate two alternative underlying mechanisms that may shape the (female) boss' influence on (female) workers' entrepreneurship decisions. Our resuls consistently suggest that entrepreneurial bosses may act as role models for the entrepreneurship activities of their employees, especially between pairs of female bosses and female employees. We do no find any evidence on female bosses acting as "queen bees" at the workplace. Female entrepreneurial bosses may, thus, act as a lever to reducing the gender gaps in entrepreneurship rates.

Abstract:

The digital economy is characterized by the use of intellectual property such as software, patents and trademarks. The pricing of such intangibles is widely used to shift profits to low-tax countries. We analyze the role of a source tax on royalty payments for abusive transfer pricing, and optimal tax policy. First, we show that mispricing of royalty payments does not affect investment behavior by multinationals.

Second, it is in the vast majority of cases not optimal for a government to set the source tax equal to the corporate tax rate. The reason is that shutting down abusive transfer pricing activities needs to be traded off against mitigating the corporate tax distortion in capital investment. The latter can be achieved by some tax deductibility of royalty payments. If the true arm’s length transfer price equals zero or for special corporate tax systems that treat debt and equity alike (i.e., for ACE and CBIT), it will be optimal to equate both tax rates.

Paper can be accessed at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2839756

Abstract:

Though fundamental to innovation and essential to many industries and occupations, the creative act has received limited attention as an economic behavior and has historically proven difficult to study. This paper studies the incentive effects of competition on individuals' creative production. Using a sample of commercial logo design competitions, and a novel, content-based measure of originality, I find that intensifying competition induces agents to explore novel, untested ideas over tweaking their earlier work, but heavy competition drives them to stop investing altogether. The results yield lessons for the management of creative workers and for the implementation of competitive procurement mechanisms for innovation.

Abstract:
We present preliminary results from a survey of 7,611 academic researchers across multiple fields in the US, Germany and Switzerland. The survey covers pre-publication sharing of research results, competition, norms of science, commercial orientation and size of research group. Results are presented across two related topics. Part I: We report the extent to which researchers report public (general) sharing of results prior to publication, and at what stage they share. Depending on their willingness to generally share and their propensity to withhold crucial parts respondents are divided into three types: sharers, ambivalent sharers and non-sharers. These are, respectively, 23.9%, 38.9%, and 37.2% of respondents. We estimate a probability model to examine the extent to which a belief that the norms of science hold in one’s area, competition and commercial orientation explain these field differences.

Part II: Recent research has considered the effect of team size on research productivity (citations, publications and patents). That work has typically focused on a single measure of team size (e.g., number of coauthors) and has failed to account for the endogeneity that exists between measures of research productivity and team size. We measure team size by number of coauthors, number in one’s research group, and number of groups worldwide in which there are collaborators. All three team size measures are found to be endogenous and instrumental variables estimation is used.