Can antitrust law enforcement spur innovation? Antitrust regulation of patent consolidation and its impact on follow-on innovations

Seokbeom Kwon and Alan C. Marco

Research Policy, 2021, vol. 50, issue 9

Abstract: This study examines the effect of antitrust regulation of patent consolidation on the development of follow-on innovations. Our reconciliation of the various strains of literature hypothesizes that in sectors where cumulative innovation is crucial to firms’ market operations, a firm that consolidates patents for substituting technologies for its already-possessed technologies discourages market competitions and follow-on innovation by competitors. In this case, antitrust regulation of patent consolidation is anticipated to positively affect competitors’ follow-on innovation. We empirically test this hypothesis with the case of the US Department of Justice's regulation of Novell's software patent transfers to four large proprietary software companies (i.e., Microsoft, Oracle, EMC, and Apple) in 2011. Our analyses using US patent, trademark, and copyright data have found evidence corroborating our hypothesis. Our research provides policy and scholarly implications regarding how antitrust law can be a complementary institution to the patent law for promoting innovation.

Keywords: Antitrust regulation; Innovation; Intellectual property; Open-source software; Patent market; Patent transfer (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:50:y:2021:i:9:s0048733321000962

DOI: 10.1016/j.respol.2021.104295

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