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The Utility Standard and the Patentability of Intermediate Technology

Reiko Aoki and Sadao Nagaoka

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: We explore the consequences of the utility requirement on speed of innovation and welfare. A weak utility requirement means that an intermediate technology with no immediate application or commercial value is patentable. Using a model of two stage innovation with free entry and trade secrecy, we identify cases when patentability is beneficial to society. Although a firm may undertake basic research protected by trade secrecy, patentability is still desirable when spillover is high and innovation costs are high. However, patentability becomes less desirable as basic research costs decrease. We also show that high value of final technology by itself does not favor non-patentability and identify condition when it does.

Keywords: utility requirement; basic research; patentability; innovation (search for similar items in EconPapers)
JEL-codes: O34 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino
Date: 2005-02
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