Patent Race Research Articles

Modeling risky portfolios with guaranteed maximize returns under a patent race

This paper studies the patent race problem of communication enterprises investing in communication technologies, and constructs a portfolio optimization model which considers the expected returns, investment risks, and replacement costs, in order to achieve the dual goals of maximizing the net investment income of backward enterprises and minimizing the expected investment risk. Through numerical experimental analysis, the optimal investment portfolio strategy under different risk levels and the impact of different risk levels on the net income of lagging company are obtained. The research results show that due to the backward research in the first stage of the backward enterprises, when their own investment decision-making power is relatively high, they can focus on the development of self-interested key technology areas in order to achieve the victory of the patent race.

Productive and Destructive Group Contests: An Experimental Investigation

In this study, we experimentally test the theoretical results of a contest game between groups when the value of the prize is fixed and when it is endogenously determined. It can decrease with contest efforts of all groups as in the case of an armed conflict or a lawsuit. The value of the prize can also increase with contest efforts as in the case of a patent race. We also analyze the impact of different groupings of players on contest efforts. We observe overinvestment and no negative effect of group size whether the prize value is exogenous or endogenous. Also, a productive contest seems to have no positive effect on individual investments. A destructive contest, however, does have a significant negative impact, but this effect is reduced with a larger number of competing groups.

Open Innovation or Traditional Patenting Strategies to Efficiently Address Health Emergencies? How Patent Information Was Used Towards Effective Treatments for COVID-19.

During the 1150 days of COVID-19 pandemic there were great efforts to develop efficient treatments for the disease. After this long time, some drugs emerged as treatment for COVID-19. Some of them are new drugs, most of them, known drugs. These developments were triggered by information already available in patent documents. Pharmaceutical companies, therefore, rushed to conduct drugs evaluations and trials in order to deliver to the world a reasonable treatment that could reach the majority of its population. However, it is not immediately clear how companies operated to reach their goals. The ability of open innovation to achieve results assertively and faster than closed innovation strategies is questioned and therefore, it is questioned whether pharmaceutical companies use open innovation to face COVID-19. In this work, data available on patent databases were mined to inform about the scientific and technological panorama of selected drugs tested for COVID-19 treatment and to understand the perspectives of such developments during the pandemic. This study evidenced that most treatments were based on known drugs, that some of the initially promising drugs were abandoned during the pandemic, and that it was able to inform if open innovation and collaborations were explored strategies. This study evidenced that the developments during COVID-19 were not based on open innovation by revealing a patent race towards the treatment development, but with practically no collaborations or information exchange between companies, universities, and research facilities.

DO STRONGER PATENTS LEAD TO FASTER INNOVATION? THE EFFECT OF CLUSTERED SEARCH

AbstractWe analyze a patent race between two firms choosing between an established and an innovative method. The unique Markov‐perfect equilibrium coincides with the cartel solution if and only if firms have the same ability of leveraging a good innovative method or there is no patent protection. Otherwise, equilibrium efforts are clustered too much in the innovative method, as compared to the cartel benchmark. The expected time to a breakthrough is minimized at an interior patent strength. Thus, a decrease in R&D productivity can go hand‐in‐hand with a concentration of research efforts in riskier areas and stronger patent protections.

Quantile analysis of “hazard-rate” game models

This paper consists of an econometric analysis of a broad class of games of incomplete information. In these games, a player’s action depends both on her unobservable characteristic (the private information), as well as on the ratio of the distribution of the unobservable characteristic and its density function (which we call the ”hazard-rate”). The goal is to use data on players’ actions to recover the distribution of private information. We show that the structural parameter (the quantile of the unobservable characteristic, denoted by L) can be related to the reduced form parameter (the quantile of the data, denoted by Q) through a differential equation Q(α)=a(L(α),αL′(α)). We analyse the local and global identification of this equation in L. At the same time, under suitable assumptions, we establish the local and global well-posedness of the inverse problem Q=T(L). We solve the differential equation and, as a consequence of the well-posedness, we estimate nonparametrically the quantile and the c.d.f. function of the unobserved variables at a root-n speed of convergence (conditional on the quantile of the data being estimated at root-n). Moreover as the transformation of Q in L is continuous with respect to a topology that implies also the derivatives, we estimate nonparametrically the quantile density and the density the unobserved variables (that are continuous functions with respect to Q) at root-n speed of convergence. We provide also several generalisations of the model accounting for exogenuous variables, implicit expression of the strategy function and integral expression of the strategy function. Our results have several policy applications, including better design of auctions, regulation models, estimation of war of attrition in patent races, and public good contracts.

Beyond the finish line: How losing in patent race drives post‐race innovation

AbstractResearch SummaryAlthough patent races of leading technology firms have garnered significant attention in the prior literature, it remains unclear how the outcome of a patent race affects subsequent firm‐level innovation. Drawing on agency theory, we propose that losing a patent race drives firms to pursue more technological innovation than winning due to managerial concerns. To investigate the mechanism, we hypothesize that the positive impact of a lost race on a firm's innovation is more pronounced when more shareholders hold near‐term investment horizons and when a CEO is less protected against the pressure of shareholders. By constructing a unique dataset of simultaneous patent applications, we find evidence consistent with the proposed theory.Managerial SummaryThis study explores the impact of a patent race on the subsequent innovation of leading technology firms. We find that losing firms tend to pursue more innovation after the race, surpassing the winner in terms of innovation. This finding is particularly pronounced when top managers are more pressured by the shareholders. Specifically, we show that the positive effect of a lost race is especially evident in publicly listed companies with a higher ratio of short‐term institutional investors and where CEOs have less protection from shareholder pressures in the public market. This research underscores how a setback in a technology competition can act as a catalyst to change innovation dynamics among competitors at the technology frontiers.

Patent races and pennant races: A new rationale for revenue sharing in sports leagues

This paper draws an analogy between patent races and pennant races. Both involve externalities: investments by individual firms (teams) produce spillover benefits, but they also precipitate a race to be first. In both contexts, the granting of partial rights to the winner balances these effects. In the case of inventions this takes the form of time-limited patents; in sports competition it takes the form of revenue sharing. This conclusion provides a justification for revenue sharing that differs from the usual claim that it promotes competitive balance.

R&D portfolio strategy on new spectrum in 5G invested by lagging firms

This paper explores the issue of patent race in which 5G enterprises invest the patent package in the field of new spectrum to research and develop some core technologies. Based on the comprehensive interaction of expected profit, investment risk, and withdrawal cost, this paper aims to achieve the two objectives of maximizing the profit and minimizing the investment risk for a lagging firm. By numerical experiment analysis, the optimal portfolio strategy of a lagging firm is obtained, followed by the phenomenon in patent race of investment disinvestment. The result shows that the lagging firm can focus on certain self-interested technologies to realize the leap of key technologies in research and development (R&D) under the high degree selection condition independently. In addition, different initial investment shares affect the portfolio strategy.

Antimalarials: A Patents Landscape Study (2015-Present)

Abstract: Plasmodium falciparum, Plasmodium vivax, Plasmodium ovale, Plasmodium malariae, and P. knowlesi are five Plasmodium species that cause malaria, a life-threatening parasitic disease. In the developing world, the rapid development of Plasmodium falciparum resistance to currently available treatments has become a serious health concern. This work reports a patent landscape analysis of patent documents related to antimalarial. The patent search was conducted using the commercially available CAS SciFinder database and the open-source patent database, The Lens. Seven hundred ninety-seven patents from The Lens and 1172 patent Sci-finder were exported using the antimalarial drug as a keyword. After the initial screening, 58 patent documents were shortlisted for in-depth analysis. After analysis, it was found that most of the top applicants come from the United States and Switzerland, which shows that market protection is more important in these two countries. The top applicants come from private companies, universities, and public-private partnerships. The United States, Europe, China, Canada, and the Republic of Korea lead the patent race in this area. The most-recorded IPC code is A61P33/06, related to the chemical substances or pharmaceutical formulations showing antimalarials activity. Most of the time, antimalarial drugs were made from quinine, artemisinin, trioxolane, naphthoquinones, and isoquinoline derivatives. Quinine and artemisinin are well-established classes of antimalarials with the maximum number of antimalarial drugs in the market. The research and innovations disclosed in most patents were focused on exploring or evaluating the new scaffolds and their mechanism of action against the normal and resistant malarial parasite. In conclusion, it has been found that various scaffolds are needed to be explored further in search of new antimalarial compounds.

Probiotic in Cosmetics: A Patents Landscape Study

Abstract: Probiotics, described as "live microorganisms that impart a health benefit on the host," are gaining popularity and are also valuable in the personal care industry. Probiotic are used in various cosmeceutical formulations such as anti-wrinkle, antiacne, and anti-ageing due to antimicrobial, antioxidant, anti-inflammatory, UV protection, and melanin synthesis inhibitor effects. In this work, a patent trend analysis of probiotic-based cosmetics patents is reported. In the last five years, patent filing has increased manifolds in this area. This study also discusses the inventions shown in the related patents with cosmeceutical compositions and their preparation methods. In conclusion, it has been found that probiotic in cosmetics still have numerous unexplored areas where innovation may flourish. The patent search was conducted using the commercially available CAS SciFinder database and the open-source patent database, The Lens. A total of 928 patents were found for search terms containing "probiotic" and "cosmetic" and retrieved from the database. After the initial screening, 38 patent documents were shortlisted for in-depth analysis. The analysis found that most of the top applicants come from the United States, the Republic of China, and the Republic of Korea, which shows market protection is more important in these countries. These countries lead the patent race in probiotic-based personal care products. The top applicants are related to private companies, universities, and people. The IPC code that has been recorded the most frequently (321 times) is A61K8/99, and it is related to cosmetics or similar toilet preparations from microorganisms other than algae or fungi. The research and development disclosed in most of the patents were focused on exploring or evaluating the mechanism of action of different probiotic strains and their application in skincare and beauty products. The most frequently used probiotic in topical formulations are Lactobacillus sp. and Bafidobacterium sp. Role of probiotics and mechanism of action for treating skin diseases such as skin whitening, skin moisturization, skin ageing, wrinkles, acne, psoriasis, rosacea, etc.

Leveraging global recombinant capabilities for green technologies: the role of ethnic diversity in MNEs’ dynamics

The growing environmental pressure and the parallel policy push on eco-innovations are making the generation of green technologies more and more profitable, given the expansion of existing markets and the creation of new ones. MNEs may show a competitive advantage in this context because of their global knowledge sourcing strategies that increase heterogeneity and variety in firms’ innovation processes. We accordingly argue that the inventors’ teams involving higher ethnic diversity are more likely to successfully generate green inventions due to their idiosyncratic experiences and diversified knowledge bases. We rely on USPTO data from an ethnic patenting database covering US-based MNEs from 1980–2009. We find that R&D teams featured by higher levels of ethnic diversity among the US-based inventors correlate with a higher probability of green patenting, but the relationship follows a non-linear pattern. Also, ethnic diversity is found to moderate the effect of recombinant capabilities on the generation of new green technologies. Our results bring implications for the strategic management of inventors’ teams by multinationals willing to run the green patent race and policymakers facing the climate change challenges.

Cellulose-Based Hydrogels: Patent Analysis

Background: Among biopolymers, cellulose and its derivatives are the most commonly used for hydrogel formulations. The innovation and improvement of cellulose-based hydrogels concerned the raw materials, synthesis and methods of preparation, formulations and fabrication processes, as well as applications.
 Objectives: This study, in the form of patent analysis, presents the state by introducing what has been innovated and patented concerning cellulose-based hydrogels.
 Methods: Three databases have been used in this study: the Patentscope, the Espacenet, and the Lens patent data set. A detailed analysis has been provided regarding publication dates, patent families, jurisdictions, inventors, applicants, owners, and patent classifications.
 Results: A total of 8053 patent documents related to cellulose-based hydrogels have been published between 1965 and 2021. The United States leads the patent race in this sector, and the Massachusetts Institute of Technology is one of the top academic applicants.
 Conclusion: Based on patent classifications, most patent documents are related to medicinal preparations characterized by special physical forms. More specifically, the classification concerns materials for prostheses or coating prostheses, including cellulose derivatives characterized by their function or physical properties, such as macromolecular gels, hydrogels, or hydrocolloids.

The COVID-19 vaccine patent race.

The seemingly simple modular technology for making new mRNA vaccines could make vaccine developers a victim of their own success.

Step by Step Innovation without Mutually Exclusive Patenting: Implications for the Inverted U

Abstract The step by step model of innovation is a benchmark model in research investigating the relationship between competition and innovation. The model assumes an industry can be in one of two states; leveled or unleveled. In an unleveled state the lagging firm is the only innovator. In a leveled state firms compete in a patent race. In this patent race successful innovation probabilities are mutually exclusive. This formulation provides mathematical tractability, but it has no other justification. I relax this assumption and use numerical simulation to demonstrate that allowing for non mutually exclusive success in innovation has important consequences for the inverted U relationship. The inverted U relationship is no longer a prediction of the model. In addition, the model predicts that patent measures will under count innovation from the leveled state, allowing for an inverted U relationship between competition and patenting under a narrow set of parameter restrictions. This theoretical exercise has important implications for understanding the current state of the empirical record on this topic.

Empowerment or warfare? dark skin, AI camera, and Transsion’s patent narratives

ABSTRACT Through document analysis and interviews, this paper examines the patent narratives of Transsion, a Chinese company dominating Africa’s smartphone market and a leading innovator in facial recognition technologies (FRTs) optimized for darker skin tones. We identify two major narratives concerning Transsion’s FRT patenting practice. First is ‘empowerment’, through which Transsion argues that there are ‘blind spots’ in conventional AI technologies and presents its AI camera as a remedy and an empowerment tool for dark-skinned users by ‘seeing’ their beauty. Second is the ‘warfare’ narrative, which is shaped by the heightening market competition and accelerating patent races among Chinese phone makers. As the battle for tech supremacy intensifies in Africa, Transsion expresses a strong sense of crisis and considers its FRT patents as ‘weapons of competition’ in preparation for a future smartphone warfare in Africa. This study makes two contributions. Empirically, through analyzing patents, we examine a relatively less-known Chinese tech company that has tremendous impact in the Global South. Theoretically, we interrogate the possibility of algorithmic empowerment against racist AI and technological independence through patents, although developing AI as weaponry, in the China-Africa context, also hampers the politics of decolonization.

Innovation Incentives in the Pharmaceutical Sector: Rethinking Competition and Public Policy?

The incentives of pharmaceutical companies to innovate and how competition affects these incentives has been topical in recent years: for the general public, as evidenced by a patent race at an unprecedented pace during the ongoing Coronavirus disease 2019 (COVID-19) pandemic; and more specifically for competition authorities, as demonstrated for example by the role innovation played in the assessment of the Bayer/Monsanto (2018), Dow/DuPont (2017), and the Novartis/GSK (2015) mergers. This article contributes to the innovation debate, notably in the pharmaceutical industry, by giving an overview on firm and market-level incentives to carry out research and development (R&D). Understanding these innovation incentives is relevant for a proper competition assessment where the effect of a particular conduct or structural change on these incentives is considered, but also more generally in the context of public policy or regulatory questions. We review the fundamental elements driving innovation incentives and tentatively relate these to the development of new drugs for neurodegenerative diseases (NDD), in particular Parkinson’s disease (PD) and Alzheimer’s disease (AD). Health Economics, Pharmaceutical Products, Innovation, R&D, Information Asymmetry, Coase Conjecture, Replacement Effect, Patent Race, Neurodegenerative Diseases, Parkinson’s Disease, Alzheimer’s Disease

Increased and biased deliberation in social anxiety.

A goal of computational psychiatry is to ground symptoms in basic mechanisms. Theory suggests that avoidance in anxiety disorders may reflect dysregulated mental simulation, a process for evaluating candidate actions. If so, these covert processes should have observable consequences: choices reflecting increased and biased deliberation. In two online general population samples, we examined how self-report symptoms of social anxiety disorder predict choices in a socially framed reinforcement learning task, the patent race, in which the pattern of choices reflects the content of deliberation. Using a computational model to assess learning strategy, we found that self-report social anxiety was indeed associated with increased deliberative evaluation. This effect was stronger for a particular subset of feedback ('upward counterfactual') in one of the experiments, broadly matching the biased content of rumination in social anxiety disorder, and robust to controlling for other psychiatric symptoms. These results suggest a grounding of symptoms of social anxiety disorder in more basic neuro-computational mechanisms.

The antecedents of green technologies: ethnic inventors and recombinant capabilities

We draw upon the micro-foundation of recombinant knowledge in GTs, the international business literature on the firms’ strategies for external knowledge sourcing and the most recent strain of migration studies in the innovation field to explore the role of ethnic migrants in leveraging recombinant creation dynamics and increasing the probability of successful green innovations. Our main argument is that the involvement of ethnic inventors increases the likelihood to successfully generate green inventions, due to their inherent experiences and distinct knowledge bases and experiences might enhance creativity (Parrotta et al., 2014) and complex problem solving (Cooke and Kemeny, 2017). We rely on data drawn from the ethnic patenting database, which covers harmonized USPTO patent records granted to US-based MNEs over the period 1975-2009 as designed by Kerr (2008), merged with information on the career of each inventor in the sample derived from the Harvard Patent Dataverse database (Lai et al., 2011). We find that teams composed of inventors with wider recombinant capabilities also tend to have a higher propensity of developing new green technologies. Also, a higher level of ethnic diversity among the US-based inventors correlates with a higher probability of patenting GTs, but the relationship follows a non-linear pattern along ethnic diversity. Finally, we ?nd that patents developed by R&D teams involving a higher degree of ethnic diversity among their domestic inventors are more likely to combine technological knowledge in a novel way to develop GTs. Our results bring implications for the strategic management of inventors’ teams by multinationals willing to run the green patent race and for policy-makers facing the climate change challenges.

The evolutionary stability of in-group altruism in productive and destructive group contests

This article examines the evolutionary stability of other-regarding preferences in a group contest for a prize, which is endogenously determined. In a destructive contest, such as war, contest efforts of all groups decrease the value of the prize. In contrast, in a productive contest, such as a patent race, contest efforts of all groups increase the value of the prize. The indirect evolutionary approach allows to endogenize players’ preferences, that is, the utility weights given by a group member, in her subjective utility function, to the material payoffs of in-group and out-group members. After characterizing the set of evolutionarily stable preference types, I show that the evolutionarily stable degree of in-group altruism is always stronger when the group contest is destructive than when it is productive. Moreover, when the group contest is strongly productive, preference evolution leads to in-group spite. However, a smaller group size and a larger number of competing groups makes this outcome less likely.

Mediating artificial intelligence developments through negative and positive incentives

The field of Artificial Intelligence (AI) is going through a period of great expectations, introducing a certain level of anxiety in research, business and also policy. This anxiety is further energised by an AI race narrative that makes people believe they might be missing out. Whether real or not, a belief in this narrative may be detrimental as some stake-holders will feel obliged to cut corners on safety precautions, or ignore societal consequences just to "win". Starting from a baseline model that describes a broad class of technology races where winners draw a significant benefit compared to others (such as AI advances, patent race, pharmaceutical technologies), we investigate here how positive (rewards) and negative (punishments) incentives may beneficially influence the outcomes. We uncover conditions in which punishment is either capable of reducing the development speed of unsafe participants or has the capacity to reduce innovation through over-regulation. Alternatively, we show that, in several scenarios, rewarding those that follow safety measures may increase the development speed while ensuring safe choices. Moreover, in the latter regimes, rewards do not suffer from the issue of over-regulation as is the case for punishment. Overall, our findings provide valuable insights into the nature and kinds of regulatory actions most suitable to improve safety compliance in the contexts of both smooth and sudden technological shifts.