Embed Size (px)
Citation preview
1
Stephanie Lee
May, 2011
Compulsory Licensing and Domestic Innovation:
Evidence from the Trading with the Enemy Act after World War II
May, 2011
Stephanie Lee
Economics Department
Stanford University
Stanford, CA 94305
under the direction of
Prof. Petra Moser
ABSTRACT
Compulsory licensing allows countries to produce patented foreign innovations without the
consent of the foreign patent holders. During World War I and World War II, the Trading with
the Enemy Act (TWEA) allowed the United States to vest all enemy-owned patents. The Alien
Property Custodian systematically licensed the vested patents to U.S. firms. Moser and Voena
(2010) found that compulsory licensing under the World War I TWEA increased U.S. domestic
innovation by a minimum of 20 percent. My paper extends their analysis by examining how
compulsory licensing under the World War II TWEA affected U.S. domestic innovation. During
World War II, patents originally owned by Germany, Japan, and Italy were licensed to U.S firms.
Did U.S. inventors face less economic incentive to produce domestic innovation because they
could cheaply use foreign innovation after paying a low licensing fee? Or did compulsory
licensing encourage domestic innovation (Moser and Voena, 2010)? For example, experience
with producing foreign innovations could have encouraged the learning-by-doing of the
compulsory licensees (Moser and Voena, 2010). To the extent that technologies were differently
affected by the World War II TWEA, I use a difference-in-differences strategy to examine the
effects of compulsory licensing on domestic innovation. My analysis provides evidence that
compulsory licensing under the World War II TWEA had positive effects on domestic
innovation activities.
Keywords: Alien Property Custodian, patent law, innovation, invention, learning-by-doing,
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Acknowledgements: I would like to thank Professor Petra Moser for her invaluable support,
advice, and patience. I would also like to thank Professor Geoffrey Rothwell for his guidance
and critical feedback. I am grateful to Professor Bruce Owen for his encouragement and
inspiration.
2
Stephanie Lee
May, 2011
Introduction
Compulsory licensing is when a government allows a third party to produce patented
product or process without the consent of the patent holder. The Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS), which came into effect in 1995 as part of the
Uruguay Round of trade discussions, is a modern treaty that specifically addresses compulsory
licensing (Bird and Cahoy, 2008). Article 31 permits WTO member states to issue compulsory
licensing under three circumstances: (1) “after efforts to obtain a license from the patent holder
on reasonable commercial terms and conditions have failed,” (2) “in situations of national
emergency or other circumstances of extreme urgency,” and (3) for public non-commercial use
(Bird and Cahoy, 2008). The World Trade Organization (WTO) Doha Declaration of 2001
endorsed developing countries’ rights to issue compulsory licensing when it proclaimed that
“each member has the right to grant compulsory licenses and the freedom to determine the
grounds upon which such licenses are granted.”
Developing countries including Thailand, India, South Africa, and Brazil have issued
compulsory licensing on patented pharmaceutical inventions to make HIV, AIDS, and malaria
drugs more affordable and accessible. For example, in 2007 Thailand issued compulsory
licensing on Abbot’s Kaletra and produced a generic version of Kaletra. Prior to compulsory
licensing, Thailand was not able to afford Kaletra for Thailand’s HIV patients, who received
treatment through the country’s universal healthcare system (Kaiser Daily HIV/AIDS Report,
2007). A generic version was sold at a price half of Kaletra’s (Chicago Tribune, 2007). In 2007,
Thailand estimated that the cheaper generic version increased the number of HIV patients who
received treatment by 400% (Ministry of Public Health and the National Health Security Office
3
Stephanie Lee
May, 2011
of Thailand).
Although developing countries that issue compulsory licensing enjoy an immediate
benefit of cheaply using an already existing innovation, the long-term effects of compulsory
licensing on innovation are highly controversial. Most prior studies have focused on the effects
compulsory licensing may have on the innovation of countries whose property rights are violated.
Some have argued that the violation of property rights will weaken the economic incentives to
invest (e.g., Bird and Cahoy, 2008, Fischs, 1994, Harris, 2009). Other studies have shown that
there is no decline in innovation by patent-owning companies affected by compulsory licensing
(e.g., Scherer, 1977, Chien, 2003). However, to examine the overall effects of compulsory
licensing on innovation, we need to be mindful that we are not simply looking at one aspect of
compulsory licensing.
To fully understand how compulsory licensing affects innovation, we also need to
examine its effects on innovation of countries that use compulsory licensing to cheaply access
foreign inventions. Although compulsory licensees still pay a licensing fee to a patent-holder, a
compulsory licensing fee is significantly low compared to a licensing fee under patent protection
(Danzon and Towse, 2005). Do compulsory licensees who benefit from compulsory licensing
face less economic incentive to produce domestic inventions because they can cheaply use
foreign innovation after paying a low licensing fee? Or does compulsory licensing encourage
compulsory licensees to invent more? (Moser and Voena, 2010) For example, experience with
producing foreign inventions can encourage the learning-by-doing of the compulsory licensees
(Moser and Voena, 2010). Economic literature suggests that learning-by-doing plays an integral
role in increasing productivity (e.g. Foster and Rosenzweig, 1995, Irwin and Klenow, 1994). In
addition, compulsory licensees can strengthen incentives to invest in skills and education
4
Stephanie Lee
May, 2011
(Landau, Mowery, and Rosenberg, 1992). My paper addresses these questions by studying the
compulsory licensing under the World War II Trading with the Enemy Act (TWEA).
The TWEA provides a rare opportunity to examine an exogenous event of compulsory
licensing. During World War I and World War II, the TWEA allowed the United States to vest
all enemy-owned patents. The TWEA was created to protect the U.S. from the war enemies and
to destroy “Germany’s great industrial army on American soil” (Alien Property Custodian, 1919,
p.14). As a part of the act, the vested patents were systematically licensed to U.S. firms. Moser
and Voena (2010) measure the effects of compulsory licensing under the World War I TWEA by
comparing the number of U.S. patents by domestic inventors before and after the TWEA in
treated and untreated chemical subclasses. Because different chemical United States Patent
Office (USPTO) subclasses were differently affected by the TWEA, Moser and Voena (2010)
use difference-in-differences and conclude that compulsory licensing had a strong and persistent
positive effect on domestic innovation. Moser and Voena (2010) show that in subclasses where
at least one enemy-owned patent was licensed to a domestic firm under the TWEA, domestic
patenting in the respective subclass increased by about 20 percent after the TWEA. The finding
is robust after controlling for pre-existing time-trends, tariffs, demand effects, patent novelty
(controlling for the remaining lifetime of patents), patent quality (controlling for license fees and
citation), triple differences, and placebo treatments.
This paper contributes to the existing literature by examining how U.S. domestic
inventions changed after the World War II TWEA. Under the authority of the World War II
TWEA, the Office of Alien Property Custodian was established in March 1942. Executive Order
No. 9139 authorized the Alien Property Custodian “to direct, manage, supervise, control or vest
[…] any patent, patent application” (Alien Property Custodian, 1943, p.4). As a result, patents
5
Stephanie Lee
May, 2011
originally owned by Germany, Japan, Italy, Hungary, Rumania, and Bulgaria were vested by the
Alien Property Custodian. If a difference-in-differences analysis using the World War II TWEA
data also shows that domestic invention increased more for technologies that benefitted more
from the TWEA, the argument that compulsory licensing can increase domestic invention would
be strengthened. The World War II data can be better than the World War I data. The World War
II data is larger and more recent. The World War I Alien Property Custodian seized
approximately 10,000 patents belonging to enemy aliens (Sommerich, 1955) while the World
War II Alien Property Custodian seized approximately 50,000 patents (Alien Property Custodian,
1943, p.1). Also, this paper extends the analysis of Moser and Voena (2010) by conducting an
economy-wide study of the effects of compulsory licensing. Because Moser and Voena (2010)
exclusively focus on chemical patents, their result can be specific to chemical class. My analysis,
which encompasses 144 different USPTO main classes, can help shed new light on how
compulsory licensing affects domestic invention.
The remainder of this paper is structured as follows. Literature Review summarizes key
economic literature on the effects of compulsory licensing. Arguments both for and against
compulsory licensing are introduced. Study Design details my paper’s methodology, which
builds on the analysis used in Moser and Voena (2010). Data Description summarizes my
dependent and independent variables. Analysis presents estimation results. Conclusion
summarizes the paper’s main findings.
Literature Review
The patent system was built to provide an economic incentive for innovation. Information
as a good has characteristics that set it apart from ordinary private goods. Information is a public
6
Stephanie Lee
May, 2011
good because it is non-excludable and non-rivalrous (Scotchmer, 2006). As a result, information
is under-produced in a competitive market (Scotchmer, 2006). To encourage innovation,
intellectual property protection offers a limited monopoly to patentees. Despite the deadweight
loss a monopoly creates, property protection has been widely accepted as a crucial solution to the
incentive problem. At the same time, fear that removing property protection will hurt innovation
has largely prevented the widespread use of compulsory licensing (Chien, 2003).
Opponents of compulsory licensing argue that the violation of property protection will
weaken the economic incentives to invent. Fisch (1994) argues that compulsory licensing of
pharmaceutical patents will significantly curtail future pharmaceutical research because
pharmaceutical industries are aware that breakthroughs may result in loss due to compulsory
licensing. Because the level of research expenditures directly corresponds to the creation of new
pharmaceuticals, a reduction in research expenditures can lead to a reduction of new
pharmaceuticals (e.g., Fisch, 1994, Schwartzman, 1975). In addition, compulsory licensing can
make other countries avoid engaging in foreign direction investment (FDI) with the nation
violating property protection (e.g., Bird and Cahoy, 2008, Lee and Mansfield, 1996). The
widespread usage of compulsory licensing will lead pharmaceutical companies and other
industries that depend on intellectual property protection to mistrust licensing nations’ promises
to protect patent rights and decrease their FDI (Bird and Cahoy, 2008). Because FDI is an
important source of economic growth for developing nations, the loss of FDI arising from
compulsory licensing can outweigh the benefit of cheaply accessing foreign patented innovation
(Bird and Cahoy, 2008).
Evidence on compulsory licensing’s effects on future research is controversial. Fisch
(1994) supports his argument that compulsory licensing will lower inventive activity by
7
Stephanie Lee
May, 2011
examining the Canadian experience of pharmaceutical licensing. From 1923 to 1993, Canadian
legislation authorized compulsory licensing over pharmaceuticals under the Canadian Patent Act
(Chien, 2003). Canada routinely and widely used compulsory licensing. From 1969 to 1983,
almost 80% of the applications for compulsory licenses were granted, which amounts to
approximately twenty compulsory licenses per year on average (Chien, 2003). Fisch (1994) finds
that only three new pharmaceuticals were introduced in Canada during a 20-year period from
1969 to 1989. In contrast, 30 new pharmaceuticals were introduced in the United States in 1991
alone (Fisch, 1994). Fisch (2009) puts forth this finding as evidence against compulsory
licensing. Despite a large numerical difference between Canadian and American pharmaceuticals,
I am not completely convinced by Fisch’s argument. Canada’s low pharmaceutical innovations
may be driven by other factors, such as differences in technology, government funding, and luck.
In contrast to Fisch’s study, other studies show that compulsory licensing does not lead to
a decline in innovation. After comparing R&D intensities in Canada to R&D intensities in other
developed countries, the Eastman Commission study concludes that compulsory licensing did
not significantly affect innovation in Canada (Chien, 2003). The study demonstrates that the
Canadian pharmaceutical market was too small and insignificant relative to the worldwide
market to be negatively affected by compulsory licensing (Chien, 2003). In 1994, Canadian
R&D expenditures as a percentage of worldwide expenditures were less than 2% (McFetridge,
1998). I find the Eastman Commission study more convincing than Fisch’s study (1977) because
the Commission uses a better measure of inventive activities - R&D intensities - instead of the
number of new pharmaceuticals. Scherer (1977) examines about seven hundred U.S. companies,
forty-two of which were subject to compulsory licensing, to show that compulsory licensing does
not cause firms to invest less in R&D. For each company, Scherer (1977) calculates the ratio of
8
Stephanie Lee
May, 2011
R&D expenditures to sales for the year 1975. He then compares the ratios of companies that
were subject to significant compulsory licensing to the ratios of companies that were not subject
to compulsory licensing. On average, companies that were subject to compulsory licensing spent
more on R&D than similar firms that were not subject to compulsory licensing (Scherer, 1977).
This finding is true for all industries, including pharmaceuticals (Scherer, 1977).
Other studies show that compulsory licensing can negatively affect FDI. However, most
present evidence is anecdotal. Lee and Mansfield (1996) conduct a survey on one hundred
American firms. The selected firms are in the chemical, pharmaceutical, machinery, food, metals,
electrical equipment, and transportation industries. Lee and Mansfield (1996) review how
selected firms perceive intellectual property protection rights in various countries and how such
perceptions impact FDI decisions. Lee and Mansfield (1996) conclude that an increased
perception by firms that a given nation has strong intellectual property rights can lead to an
increase in as much as hundreds of millions of dollars in FDI. Conversely, weak intellectual
property rights can negatively affect FDI (Bird and Cahoy, 2008, Lee and Mansfield, 1996). Bird
and Cahoy (2008) argue that Egypt’s broad and ambiguous compulsory licensing statue can, in
part, explain decreasing FDI flows to Egypt. Despite the Egyptian government’s effort to attract
FDI, FDI continued to decline from $948 million in 1987 to $598 million in 1995 to $428.2
million in 2001 (Bird and Cahoy, 2008). Egypt’s flexible compulsory licensing allows the
government to issue compulsory licenses when drugs are placed outside the reach of most
consumers or when high prices are politically troublesome (Bird and Cahoy, 2008). Bird and
Cahoy (2008) argue that the mere presence of a broad compulsory license statue can negatively
affect investment climate and lower FDI flow into Egypt. In fact, the United States’ ambassador
to Egypt in 2001 stated that “Egypt’s ability to attract foreign investors in many fields will hinge
9
Stephanie Lee
May, 2011
on adequate protection of copyrights, patents, and other intellectual property” (Bird and Cahoy,
2008). The Pharmaceutical Research and Manufacturers Association of American (PhRMA)
also reports that Egypt’s weak intellectual property laws prevented PhRMA from investing $300
million in Egypt’s pharmaceutical sector (Bird and Cahoy, 2008). Despite the active discussions
surrounding compulsory licensing’s effects on FDI, there are no rigorous empirical studies that
test compulsory licensing’s effects on FDI.
Proponents of compulsory licensing, on the other hand, argue that countries that use
compulsory licensing to access foreign inventions can benefit from great welfare gains because
experience with producing foreign inventions will encourage the learning-by-doing of the
compulsory licensees (Moser and Voena, 2010). Learning-by-doing refers to the decline in
production costs resulting from greater experience with the production process (Irwin and
Klenow, 1994). Also, the licensees can benefits from the “spillover” effects of the original
innovation (Chien, 2003).
Prior studies show that compulsory licensing can have positive effects on the licensee
(Chaudhuri, Goldberg, and Jia, 2006, Moser and Voena, 2010). Chaudhuri, Goldberg, and Jia
(2006) conduct a case study of quinolones in the Indian pharmaceuticals market. Quinolones are
a family of synthetic antibiotics that are widely used in the pharmaceutical market. Although
quinolones were under patent in the U.S., India did not recognize patents for pharmaceuticals
between 1972 and 2005 (Chaudhuri, Goldberg, and Jia, 2006). The authors carry out
counterfactual simulations of what prices, profit, and consumer welfare would have been if
quinolone had been under patent in India (Chaudhuri, Goldberg, and Jia, 2006). As previously
introduced, Moser and Voena (2010) examine the effects of compulsory licensing on licensees
by studying compulsory licensing under the World War I TWEA. Moser and Voena (2010)
10
Stephanie Lee
May, 2011
examine changes in annual chemical patents by U.S. domestic inventors to measure the effects of
compulsory licensing under the World War I TWEA.
Chaudhuri, Goldberg, and Jia (2006) use product-level data on monthly pharmaceutical
prices and sales from January 1999 to December 2000 to estimate demand and supply for
quinolones (Chaudhuri, Goldberg, and Jia, 2006). Afterward, the estimated demand and supply
were used to predict what would have happened if quinolones patents were enforced in India
(Chaudhuri, Goldberg, and Jia, 2006). Moser and Voena (2010) use difference-in-differences
across treated and untreated chemical patent subclasses. Subclasses are regarded as treated if the
subclass includes at least one enemy-owned patent that was licensed to a domestic firm. This
empirical strategy allows the authors to compare technological subfields that are subject to the
same shocks except for compulsory licensing. The data on treatment consist of 699 enemy-
owned chemical patents that were licensed to U.S. firms. The data on the outcome include all
165,400 U.S. patents (1875-1939) in 21 USPTO classes of organic chemicals (Moser and Voena,
2010).
Although Chaudhuri, Goldberg, and Jia (2006) analyze a contemporary event while
Moser and Voena (2010) analyze a historical event, both studies reach a similar conclusion.
Chaudhuri, Goldberg, and Jia (2006) find that patent enforcement would result in an enormous
welfare loss for the Indian economy. The estimated loss ranges from $144 million to $450
million annually (Chaudhuri, Goldberg, and Jia 2006). The authors also argue that an
overwhelming portion of welfare loss will result from the loss of consumer welfare (Chaudhuri,
Goldberg, and Jia, 2006). Moser and Voena (2010) show a high and statistically significant
correlation between compulsory licensing and patenting by domestic inventors. In chemical
subclasses where domestic firms received at least one enemy-owned patent, domestic inventors
11
Stephanie Lee
May, 2011
produced between 0.118 and 0.234 additional patents per year after 1919. This implies a 15 to 30
percent increase in domestic invention (Moser and Voena, 2010). Both studies suggest that
compulsory licensees can benefit from compulsory licensing.
The review of prior studies indicates that compulsory licensing is not a simple event with
a conclusive consequence. Some studies demonstrate that compulsory licensing can have
negative effects, while others show that compulsory licensing can have positive effects. Before
any consensus on the overall effects of compulsory licensing can be reached, more research
needs to be done. I wish that my analysis of the World War II TWEA can contribute to the
ongoing discussions on compulsory licensing.
Study Design
(1) The TWEA as a Natural Experiment
Most contemporary compulsory licensing decisions, such as Thailand’s decision to issue
compulsory licensing on Kaletra, are not completely exogenous because compulsory licensing is
issued after much deliberation. For example, a government may be more likely to issue
compulsory licensing on a highly-demanded innovation. To measure the effects of compulsory
licensing on domestic innovation, we need to analyze an exogenous event of compulsory
licensing. The timing of the TWEA and the types of technologies that were available for
licensing are exogenous. World War I and II triggered compulsory licensing, not the other way
around. Also, TWEA non-discriminatorily vested all enemy-owned patents.
The vested enemy-owned patents covered “inventions in every field of applied science
and represent millions of man-hours of research and the expenditure of many million dollars”
(Alien Property Custodian, 1943, p.1). The vested inventions included “some of the finest
12
Stephanie Lee
May, 2011
foreign research in modern science, particularly in the production of dyestuffs, plastics,
pharmaceuticals, and electrical goods” (Alien Property Custodian, 1943, p.1). For the war
purposes and for the general use in the national interest, vested patents were made cheaply
available to American industry. All patents classes were sold for 10 cents each, except nine
patent classes, which were sold 25 cents each (Alien Property Custodian, 1943).
In addition to licensing the vested patents, the Alien Property Custodian promoted the use
of vested patents through various measures. The Custodian published the specifications of
pending applications (Sommerich, 1955, p.588). It also published catalogues of vested patents
and abstracts of all vested chemical patents. American Chemical Society then compiled and
published a 34-volume set of abstracts of 8,000 vested chemical patents. In addition, the
Custodian “organized libraries of vested patents serviced by technical field representatives in
various cities, exhibited a traveling library of vested patents in every major industrial area of the
United States, [and] co-operated with other governmental agencies in developing new uses for
vested patents in both the military and civilian field” (Sommerich, 1955, p.588). Because all
vested patents, including the ones that were not licensed, were readily available to the U.S.
inventors, this paper examines the effects of compulsory licensing by examining vested enemy-
owned patents.
(2) Data
In this paper, the independent variable is the number of patents vested by the World War
II Alien Property Custodian. These vested patents refer to enemy-owned patents that were made
publicly available for licensing, regardless of whether the patents were licensed to U.S. firms or
not. My paper is different from Moser and Voena (2010) in that Moser and Voena (2010)’s main
13
Stephanie Lee
May, 2011
specification uses the data on licensed patents, not vested patents. However, the licensing
decisions of U.S. firms may not have been exogenous because U.S. firms were more likely to
license in subclasses where initial levels of domestic invention were weak (Moser and Voena,
2010). To address such a selection bias, Moser and Voena (2010) uses intent to treat regressions.
Because my paper uses the data on vested patents, it does not suffer from a selection bias, and
can improve on Moser and Voena (2010).
The data on vested patents comes from Patents at Work: A Statement of Policy published
in January 1943. In Patents at Work, the number of patents vested before October 1942, the
number of additional patents vested before January 1943, and the number of patent applications
vested before November 1942 are recorded for each USPTO main class. A portion of the data is
replicated below (see Table 1). USPTO Class No. 51 denotes “Abrading,” and within the class, a
total of 165 patents were vested before October 2, 1942. This paper uses the data on the number
of U.S. patents that were vested before October 1942.
Table 1 – Patents Vested by the Alien Property Custodian
Class Class title
Number of Patents
1st Edition
Oct. 2, 1942
51 Abrading 165
181 Acoustics 75
244 Aeronautics 336
259 Agitating 52
Source: Alien Property Custodian of the United States. 1943. Patents at Work
14
Stephanie Lee
May, 2011
The original data include 300 USPTO main classes. Among those 300 USPTO main
classes, the number and title of 144 of them have not changed over the years. 18 USPTO main
classes had minor changes in class titles. For example, USPTO Class No. 7 denoted “Compound
Tools” in 1942, but USPTO Class No. 7 now refers to “Compound Hand Tools.” For 42 of the
USPTO main classes, either the class number or class title has changed. For each of them, I
could locate a class title that roughly matches the original title. For example, USPTO Class No.
133 denoted “Coin Handling,” but under the current system, USPTO Class No. 453 refers to
“Coin Handling.” For 92 of the USPTO main classes, the class number and title have both
changed and I could not locate a title that roughly matches the original title. Some main classes
seemed to be no longer present because they became obsolete. For example, USPTO Class No.
55 denoted “Harrows and Diggers,” but the current USPTO system does not have such a main
class. For my analysis, I examine 144 USPTO main classes whose class number and title have
not changed.
The dependent variable is the number of U.S. patents per USPTO main class per year. I
collected this data from Patenting By Geographic Region (State and Country), Breakout by
Technology Class, Count of 1963 - 2009 Utility Patent Grants and USPTO Master Classification
File.
(3) Empirical Strategy
I use a difference-in-differences strategy to study the effects compulsory licensing under
the World War II TWEA had on domestic innovation activities. This paper relies on the
following estimation, which closely resembles the one Moser and Voena (2010) use:
Total U.S. Patents per Main Classc,t = α0 +ß Vested Patentsc ⋅ postTWEAt + δt + fc + εc,t .
15
Stephanie Lee
May, 2011
For this analysis, the dependent variable is the number of total U.S. patents per USPTO main
class per year (1900-1971). Total U.S. patents data include both U.S. patents granted to U.S.
inventors and U.S. patents granted to foreign inventors. It would have been ideal to use the
number of U.S. patents granted to U.S. inventors per main class per year as a dependent variable,
because the purpose of this paper is to find the effects TWEA had on innovation activities of U.S.
inventors. However, the data on the number of U.S. patents granted to U.S. inventors per main
class per year is unavailable for years from 1900 to 1962. As a result, I instead use the data on
total U.S. patents and provide a robustness check using patent data from year 1963 to 1971.
Vested Patents measures the number of enemy patents per USPTO main class. postTWEA equals
1 for every year starting from 1942. δ is year fixed effects and f is USPTO main class fixed
effects. If the result is statistically significant, it would suggest that compulsory licensing under
the World War II TWEA could have had effects on patenting by domestic inventors.
As a robustness check for using the number of total U.S. patents per main class per year
(1900-1971) as a dependent variable, I examine whether an analysis using total U.S. patents
(1963-1971) yields results that are similar to results I get using U.S. patents granted to U.S.
inventors (1963-1971). I estimate two simple linear models:
Patents Granted to U.S. Inventorsc,t = α0 +ß Vested Patentsc + γ ⋅ Zc,t + δt + fc + εc,t and
Total U.S. Patents per Main Classc,t = α0 +ß Vested Patentsc + δt + fc + εc,t .
In the first model, the dependent variable is the number of U.S. patents granted to U.S. inventors
per USPTO main class per year (1963-1971). Patents Granted to U.S. Inventors is measured by
subtracting foreign patents from the total number of U.S. patents per year (Moser and Voena,
2010). In the second model, the dependent variable is the number of total U.S. patents per
USPTO main class per year (1963-1971). In both models, Vested Patents measures the number
16
Stephanie Lee
May, 2011
of enemy patents per USPTO main class. Z in the first model measures the total number of
foreign patents and it controls for unobservable factors, such as technological progress within
main classes (Moser and Voena, 2010). Moser and Voena (2010) also use the total number of
foreign patents as a control variable. δ is year fixed effects and f is USPTO main class fixed
effects. If the results from two regressions are similar, I can draw some valid conclusions from
the difference-in-differences estimation.
Data Description Section
(1) Descriptive Statistics on Patents Vested by the Alien Property Custodian
My independent variable is the number of patents vested by the World War II Alien
Property Custodian. Specifically, I examine the number of vested patents per USPTO main class
for 144 USPTO main classes, whose class number and title have not changed.
Table 2 shows the summary statistics of patents vested by the Alien Property Custodian.
Included in the 144 USPTO main classes are 13,236 vested patents. On average, each main class
has 92 vested patents. A main class with the most number of patents vested is USPTO Main
Class No. 250 titled “Radiant Energy.” Class No. 250 had 1,672 patents that were vested by the
Alien Property Custodian.
17
Stephanie Lee
May, 2011
Table 2 – Summary Statistics of Patents Vested by Alien Property Custodian
Vested Patents per Main Class
Mean 92
Standard Error 15.60
Median 41
Mode 0
Standard Deviation 187
Kurtosis 43.7
Skewness 6.0
Range 1672
Minimum 0
Maximum 1672
Sum 13236
Count 144
Table 3 is a frequency table for the number of vested patents. It shows how many USPTO
main classes each had a specific number of vested patents. For example, a total of 137 USPTO
main classes each included 1 to 100 vested patents. As Table 3 shows, most USPTO main classes
each included 0 to 500 vested patents. However, there are three main classes that included a
much greater number of vested patents. Main Class No. 250 “Radiant Energy” included 1,672
vested patents, Main Class No. 260 “Chemistry, carbon compounds” included 1,208 vested
patents, and Main Class No. 123 “Internal-combustion engines” included 522 vested patents. I
checked these three outliers, and I concluded that they are actual observations, not mistakes.
18
Stephanie Lee
May, 2011
Table 3 – Frequency Table
Number of Patents Vested Main Class Frequency
0 7
1-100 99
101-200 23
201-300 8
301-400 1
401-500 3
501-600 1
601-700 0
701-800 0
801-900 0
901-1000 0
1001-1100 0
1101-1200 0
1201-1300 1
1301-1400 0
1401-1500 0
1501-1600 0
1601-1700 1
Total 144
Figure 1 shows histograms that plot the distribution of vested patents. The first histogram
plots Table 3 and shows that vested patent data is skewed to the right with outliers at the upper
range of the data. The second histogram plots main class frequency with a smaller bin width and
shows the frequency of main classes that included 0 to 500 vested patents.
19
Stephanie Lee
May, 2011
Figure 1 – Frequency Histograms of Vested Patents
7
99
23
8 1 3 1 0 0 0 0 0 0 1 0 0 0 1
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
Ma
in C
lass
Fre
qu
ency
Number of Vested Patents
Distribution of Vested Patents (Bin Width = 100)
Frequency
7
37
28
13 13
8 9 7
2 2 3 6
1 0 1 0 0 1 0 0 0 1 0 1 1 0 3
0
20
40
60
80
10
0
12
0
14
0
16
0
18
0
20
0
22
0
24
0
26
0
28
0
30
0
32
0
340
36
0
38
0
40
0
42
0
44
0
46
0
48
0
50
0
More
Ma
in C
lass
Fre
qu
ency
Number of Vested Patents
Distribution of Vested Patents (Bin Width = 20)
Frequency
20
Stephanie Lee
May, 2011
(2) Descriptive Statistics on Total U.S. Patents (1900-1971)
To the extent that different technologies were differently affected by the World War II
TWEA, this paper uses difference-in-differences to examine the effects World War II TWEA
had on domestic innovation. This paper uses total U.S. patent counts per main class per year data
(1900-1971). I collected this data from the USPTO Master Classification File I received from the
USPTO. Ideally, I would like to use data on U.S. patents granted to U.S. residing inventors.
Unfortunately, U.S. patent data that goes back to 1900 cannot be broken by the nationality of
inventors. If results I get from using total U.S. patents (1900-1971) are robust to different
specifications, I would be able to draw some useful conclusions from total U.S. patents data
(1900-1971).
Table 4 shows the summary statistics of total U.S. patents (1900-1971). There are a total
of 10,368 observations because I am studying 144 USPTO main classes over a 72 year time span
(144*72 = 10,368). From 1900 to 1971, a total of 1,306,239 patents were assigned to the 144
USPTO main classes. On average, each main class has 126 patents per year.
21
Stephanie Lee
May, 2011
Table 4 – Summary Statistics of Total U.S. Patents (1900-1971)
Total U.S. Patents (1900-1971)
Mean 126
Standard Error 1.29
Median 84
Mode 0
Standard Deviation 131
Kurtosis 4.9
Skewness 1.9
Range 1113
Minimum 0
Maximum 1113
Sum 1306239
Count 10368
Because TWEA was established in 1942, I define observation to be treated if data is from
1942 to 1971. I define observation to be untreated if data is from 1900 to 1941. Table 5 provides
the summary statistics of untreated observations while Table 6 provides the summary statistics of
treated observations. From 1900 to 1941, a total of 798,815 patents were assigned to the 144
USPTO main classes. On average, each main class has 135 patents per year (See Table 5). From
1942 to 1971, a total of 507,424 patents were assigned to the 144 USPTO main classes. On
average, each main class has 114 patents per year (See Table 6). Correlation between total U.S.
patents (1942-1971) and vested patents is 0.288582.
22
Stephanie Lee
May, 2011
Table 5 – Summary Statistics of Untreated Total U.S. Patents (1900-1941)
Total U.S. Patents (1900-1941)
Mean 135
Standard Error 1.71
Median 93
Mode 0
Standard Deviation 131
Kurtosis 3.2
Skewness 1.6
Range 939
Minimum 0
Maximum 939
Sum 798815
Count 5904
Table 6 – Summary Statistics of Treated Total U.S. Patents (1942-1971)
Total U.S. Patents (1942-1971)
Mean 114
Standard Error 1.94
Median 73
Mode 0
Standard Deviation 130
Kurtosis 7.7
Skewness 2.3
Range 1113
Minimum 0
Maximum 1113
Sum 507424
Count 4465
23
Stephanie Lee
May, 2011
(3) Descriptive Statistics on U.S. Patents Granted to U.S. Inventors (1963-1971)
Even though U.S. patent data that goes back to 1900 cannot be broken by the nationality
of inventors, U.S. patent data from 1963 can be broken by the nationality of inventors. So, in a
robustness check, this paper uses data on U.S patents granted to U.S. inventors per USPTO main
class per year for years from 1963 to 1971. I collected this data from Patenting By Geographic
Region (State and Country), Breakout by Technology Class, Count of 1963 - 2009 Utility Patent
Grants published by USPTO Patent Technology Monitoring Team.
Table 7 shows the summary statistics of U.S. patents granted to U.S. inventors (1963-
1971). There are a total of 1,296 observations because I am studying 144 USPTO main classes
over a nine year time span (144*9 = 1,296). From 1963 to 1971, a total of 143,453 patents
granted to U.S. inventors were assigned to the 144 USPTO main classes. On average, each main
class has 111 patents per year.
Table 7 – Summary Statistics of Patents Granted to U.S. Inventors (1963-1971)
Patents Granted to U.S. Inventors (1963-1971)
Mean 111
Standard Error 3.57
Median 69
Mode 0
Standard Deviation 129
Kurtosis 6.7
Skewness 2.2
Range 875
Minimum 0
Maximum 875
Sum 143,453
Count 1,296
24
Stephanie Lee
May, 2011
Figure 2 plots the number of vested patents per main class on the x-axis and the number
of patents granted to U.S. inventors per main class per year (1963-1971) on the y-axis. As
discussed in the descriptive statistics on vested patents, there are only three main classes which
have more than 500 vested patents. Because of these three observations, Figure 2 has plots that
are heavily clustered between 0 and 500. Only 27 observations (three main classes over a nine
year time span= 3*9 observations) have x-value which is greater than 500. As a result, it is hard
to understand scatter plots as it is presented in Figure 2.
Figure 3 drops the 27 observations and plots the number of vested patents per main class
on the x-axis and the number of patents granted to U.S. inventors per main class per year (1963-
1971) on the y-axis. For each main class that has vested patents, I have nine outcome
observations because I examine data from year 1963 to 1971. Figure 3 plots 1,269 observations.
Correlation between patents granted to U.S inventors (1963-1971) and vested patents is
0.329816.
25
Stephanie Lee
May, 2011
Figure 2 – Plot of the Number of Patents Granted to U.S. Inventors (1963-1971) on the Number of Vested Patents
0 500 1000 1500
02
00
40
06
00
80
0
Number of Vested Patents
Nu
mb
er
of P
ate
nts
Gra
nte
d to
U.S
. In
ve
nto
rs (
19
63
-19
71
)
26
Stephanie Lee
May, 2011
Figure 3 – Plot of the Number of Patents Granted to U.S. Inventors (1963-1971) on the Number of Vested Patents
(Without 27 Extreme Observations)
0 100 200 300 400
02
00
40
06
00
80
0
Number of Vested Patents
Nu
mb
er
of P
ate
nts
Gra
nte
d to
U.S
. In
ve
nto
rs (
19
63
-19
71
)
27
Stephanie Lee
May, 2011
Analysis
(1) Difference-in-differences Analysis Using Data on Total U.S. Patents (1900-1971)
In this section, I use a difference-in-differences strategy to study the effect of TWEA on
innovation activities. Using a difference-in-differences strategy across USPTO main classes
before and after the World War II TWEA, I examine whether the number of patents increased
more in USPTO main classes that had more vested patents. I specifically focus my analysis on
144 USPTO main classes whose USPTO class number and title have not changed since 1942.
The dependent variable is the number of total U.S. patents per main class per year (1900-
1971). Regression results are present in Table 8. Model 1 estimates:
Total U.S. Patents per Main Classc,t = α0 +ß Vested Patentsc ⋅ postTWEAt + εc,t
where postTWEAt equals 1 if data is from 1942 to 1971. Model 2 controls for year fixed effects.
Model 3 controls for both year fixed effects and main class fixed effects.
I hypothesize that the coefficient on Vested Patentsc ⋅ postTWEAt would be positive
because the vested patents would have had positive effects on total U.S. patents. I hypothesize
that the main classes that had more vested patents experienced a greater increase in innovation
activities after the World War II TWEA compared to the main classes that had less vested
patents. The vested patents would likely have had long-term positive effects on U.S. innovation
activities. Previous literature suggests that easy access to foreign patents can benefit domestic
innovation. For example, experience with producing foreign inventions can encourage the
learning-by-doing of the compulsory licensees (Moser and Voena, 2010). Using a difference-in-
differences strategy, Moser and Voena (2010) show that the chemical subclass that had received
at least one vested patent produced between 0.118 and 0.234 additional patents per year after
28
Stephanie Lee
May, 2011
1919. If my analysis shows that the coefficient on Vested Patentsc ⋅ postTWEAt is positive, it
would suggest that compulsory licensing under the World War II TWEA might have had a
positive effect on the number of total patents that the U.S. granted to inventors.
Table 8 –Dependent Variable is the Number of Total U.S. Patents per USPTO Main Class per
Year (1900-1971)
Model 1 Model 2 Model 3
Number of vested patents per
main class times postTWEA
0.148***
(0.010)
0. 201***
(0.010)
0.116***
(0.008)
Year fixed effects
No
Yes
Yes
Main class fixed effects
No No Yes
Number of observations 10,368 10,368 10,368
Number of main classes
144
144
144
R-squared 0.0216 0.0746 0.7095
Adjusted R-squared 0.0215 0.0682 0.7033
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
29
Stephanie Lee
May, 2011
For Model 1, the coefficient on Vested Patentsc ⋅ postTWEAt is positive and statistically
significant at the 99% level (see Table 8, column for Model 1). Adding year fixed effects does
not change the coefficient on Vested Patentsc ⋅ postTWEAt. It remains positive and statistically
significant at the 99% level (see Table 8, column for Model 2). The coefficient remains positive
after adding both year fixed effects and main class fixed effects (see Table 8, column for Model
3).
I believe Model 3, which includes both year fixed effects and main class fixed effects,
would best estimate the effects of compulsory licensing under TWEA. This is because I expect
investors’ patenting activities to differ across years and across main classes. As Moser (2005)
shows, propensity to patent varies across industries, which suggests that the addition of main
class fixed effects is valid. Model 3 shows that each vested patent produced about 0.116
additional patents per year after 1942 (see Table 8, column for Model 3). If a main class included
100 vested patents, the number of total patents increased by about 11.6 patents per year between
1942 and 1971. In 1942, each main class, on average, included 92 vested patents. This implies
that total patents increased on average by 10.672 (0.116*92=10.672) patents per year for years
between 1942 and 1971. On average, there were 114 total U.S. patents per main class per year
between 1942 and 1971. Thus, 10.672 additional patents imply about 9 percent increase in total
U.S. patents. The regression analysis provides some evidence that each vested patent had
positive effects on the number of total U.S. patents granted after 1942.
30
Stephanie Lee
May, 2011
(2) Analysis Using Data on U.S. Patents Granted to U.S. Inventors (1963-1971)
As discussed in details in Study Design, it would have been ideal to use the data on U.S.
patents granted to U.S. inventors (1900-1971) when using a difference-in-differences strategy.
Due to data limitation, Section 1 of Analysis instead uses the data on total U.S. patents (1900-
1971). As a robustness check for using the number of total U.S. patents per main class per year
(1900-1971) as a dependent variable, I examine whether an analysis using U.S. patents granted
to U.S. inventors (1963-1971) yields results that are similar to the results of an analysis using
total U.S. patents (1963-1971). In this section, I use the data on U.S. patents granted to U.S
inventors per USPTO main class per year (1963-1971) to examine the relationship between the
number of vested patents per USPTO main class and the number of U.S patents granted to U.S.
inventors per USPTO main class (1963-1971). Then, Section 3 of Analysis replicates what is
done in this section, but using the data on total U.S. patents (1963-1971) instead of the data on
U.S. patents granted to U.S. inventors (1963-1971). If the results from Section 2 and Section 3
are similar, the difference-in-differences estimation would be robust.
In this section, I use ordinary least squares (OLS) regression to examine the relationship
between the number of vested patents and the number of U.S patents granted to U.S. inventors
(1963-1971). The dependent variable is U.S. patents granted to U.S. inventors per USPTO main
class per year (1963-1971). OLS regression results are present in Table 9. Model 1 estimates:
Patents Granted to U.S. Iinventorsc,t = α0 +ß Vested Patentsc + εc,t
where Vested Patents measures the number of vested patents per USPTO main class. Model 2
adds to Model 1 an independent variable, Vested Patents Squared:
Patents Granted to U.S. Iinventorsc, t= α0 +ß1 Vested Patentsc + ß2 Vested Patents Squaredc + εc,t
31
Stephanie Lee
May, 2011
and it examines whether the marginal benefit of an additional patent is decreasing. Model 3
controls for year fixed effects. Model 4 controls for both year fixed effects and main class fixed
effects. Model 5 estimates:
Patents Granted to U.S .Inventorsc,t = α0 +ß Vested Patentsc + γ ⋅ Zc,t + δt + fc + εc,t
where the control variable Z measures the total number of foreign patents per main class per year,
and Moser and Voena (2010) use the same control variable in their paper. δ measures year fixed
effects and f measures USPTO main class fixed effects.
32
Stephanie Lee
May, 2011
Table 9 – OLS Regressions, Dependent Variable is the Number of Patents Granted to U.S.
Inventors per USPTO Main Class per Year (1963-1971)
Model 1 Model 2 Model 3 Model 4 Model 5
Number of vested patents per
main class
0.227***
(0.018)
0.718***
(0.043)
0.227***
(0.018)
0.241***
(0.010)
0.147***
(0.009)
Number of vested patents
squared
-0.00038***
(3.06e-05)
Number of patents by foreign
inventors
1.242***
(0.055)
Year fixed effects
No
No
Yes
Yes
Yes
Main class fixed effects
No No No Yes Yes
Number of observations 1,296 1,296 1,296 1,296 1,296
Number of main classes
144
144
144
144
144
R-squared 0.1088 0.2040 0.1174 0.9398 0.9585
Adjusted R-squared 0.1081 0.2028 0.1112 0.9318 0.9529
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
33
Stephanie Lee
May, 2011
For Model 1, I hypothesize that the coefficient on Vested Patents would be positive and
that that the number of vested patents per main class and the number of U.S. patents granted to
U.S. inventors per main class would have a positive relationship. As hypothesized, the
coefficient on Vested Patents is positive and statistically significant at the 99% level (see Table 9,
column for Model 1). OLS results show that the greater the number of vested patents in a main
class, the greater the number of patents granted to U.S. inventors per main class between 1963
and 1971.
Model 2 adds a quadratic term for the number of vested patents. If the marginal benefits
of an additional knowledge are decreasing, the coefficient on the number of vested patents
squared would be negative (Moser and Voena, 2010). Based on the principle of diminishing
marginal benefit, I hypothesize that the coefficient on Vested Patents would be positive and that
the coefficient on Vested Patents Squared is negative. Table 9 (see the column for Model 2)
shows that the coefficient on Vested Patents is positive and the coefficient on Vested Patents
Squared is negative. The estimate of coefficient on Vested Patents Squared, -0.00038, is very
close to zero, suggesting that the effect of diminishing marginal benefit is not very strong. Both
coefficients are statistically significant at the 99% level.
Model 3 controls year fixed effects. As can be seen in Table 9 (see the column for Model
3), adding year fixed effects does not change the coefficient on Vested Patents. Compared to
Model 1, standard error on the coefficient remains the same. Controlling for both year fixed
effects and main class fixed effects does not change the sign of the coefficient on Vested Patents
(see Table 9, column for Model 4). For Model 4, the estimate of coefficient of Vested Patents is
0.241.
34
Stephanie Lee
May, 2011
Model 5 adds the total number of foreign patents per main class per year as a control
variable. Model 5 also controls for year fixed effects and main class fixed effects. As
hypothesized, the sign of the coefficient on Vested Patents is positive (see Table 9, column for
Model 5). The coefficient on the total number of foreign patents per main class is 0.147 and
statistically significant at the 99% level.
The regression analysis provides some statistical evidence that the relationship between
the number of vested patents and the number of patents granted to U.S. inventors (1963-1971) is
positive and significant.
(3) Analysis Using Data on Total U.S. Patents (1963-1971)
This section replicates what has been done in Section 2 of Analysis (see page 29-33),
except this time using the data on total U.S. patents (1963-1971) instead of using the data on U.S.
patents granted to U.S. inventors (1963-1971). OLS regression results are present in Table 10.
35
Stephanie Lee
May, 2011
Table 10 – OLS Regressions, Dependent Variable is the Number of Total U.S. Patents per
USPTO Main Class per Year (1963-1971)
Model 1 Model 2 Model 3 Model 4
Number of vested patents per
main class
0.310***
(0.022)
0. 986***
(0.052)
0.310***
(0.022)
0.316***
(0.012)
Number of vested patents
squared
-0.00052***
(3.73e-05)
Number of patents by foreign
inventors
Year fixed effects
No
No
Yes
Yes
Main class fixed effects
No No No Yes
Number of observations 1,296 1,296 1,296 1,296
Number of main classes
144
144
144
144
R-squared 0.1291 0.2442 0.1408 0.9349
Adjusted R-squared 0.1284 0.2430 0.1348 0.9263
36
Stephanie Lee
May, 2011
Model 1 estimates: Number of Total Patentsc,t = α0 +ß Vested Patentsc + εc,t where
Vested Patents again measures the number of vested patents per USPTO main class. Model 2
adds to Model 1 an independent variable, Vested Patents Squared and examines the marginal
benefit of an additional patent. Model 3 controls for year fixed effects. Model 4 controls for both
year fixed effects and main class fixed effects.
I hypothesize that the coefficient on Vested Patents would be positive and that that the
number of vested patents per main class and the number of total U.S patents per main class per
year would have a positive relationship. As hypothesized, the coefficients on Vested Patents are
positive for all four models present in Table 10. The coefficients are statistically significant at the
99% level. Model 2 suggests that the marginal benefit of an additional patent is decreasing
because the coefficient on Vested Patents is positive and the coefficient on Vested Patents
Squared is negative (See Table 10, column for Model 2).
Because the number of total U.S. patents per main class is always greater than the
number of U.S. patents granted to U.S. inventors, I expect that the coefficient on Vested Patents
to be larger when I use the total number of U.S. patents per main class per year (1963-1971) as a
dependent variable. As expected, Table 9 and Table 10 show that the coefficient on Vested
Patents tends to be larger when I use the total number of U.S. patents per main class per year
(1963-1971) as a dependent variable instead of the number of U.S. patents granted to U.S.
inventors per main class per year (1963-1971). Nevertheless, using the total number of U.S.
patents per USPTO main class per year (1963-1971) as a dependent variable still yields results
that are similar to the results I get when using the number of U.S. patents granted to U.S.
inventors per USPTO main class per year (1963-1971) as a dependent variable. Section 2 and
Section 3 show that the coefficients on Vested Patents for all models remain positive and
37
Stephanie Lee
May, 2011
significant when I use the total number of U.S. patents per main class per year (1963-1971).
Thus, I conclude that although using the total number of U.S. patents (1900-1971) in difference-
in-differences strategy may create bias in measuring the effects of TWEA on domestic
innovation, that bias may not be too serious. I can draw such a conclusion because Section 2 and
Section 3 show that the coefficients on Vested Patents are positive and significant regardless of
whether I use total U.S. patent data or U.S. patent granted to U.S. inventors data.
Figure 4 plots the number of vested patents per main class on the x-axis and the number
of total U.S. patents per main class per year (1963-1971) on the y-axis. The figure shows the
positive correlation between the number of vested patents and the number of total U.S. patents
(1963-1971).
38
Stephanie Lee
May, 2011
Figure 4 – Plot of the Number of Total U.S. Patents (1963-1971) on the Number of Vested Patents
0 500 1000 1500
02
00
40
06
00
80
01
00
0
Number of Vested Patents
To
tal U
.S. P
ate
nts
(1
96
3-1
97
1)
39
Stephanie Lee
May, 2011
Conclusion
This paper examines the World War II TWEA to study the effects of compulsory
licensing on domestic inventions. Difference-in-differences analysis suggests that each vested
patent had positive effects on the number of total U.S. patents granted after 1942. USPTO main
classes that had more vested patents experienced a greater increase in the number of total U.S.
patents granted. A robustness check shows that I can study the effects TWEA had on domestic
innovation by using total U.S. patents (1900-1971) as a dependent variable in my difference-in-
differences estimation. My paper extends the analysis of Moser and Voena (2010) by showing
that analysis encompassing different USPTO main classes leads to the conclusion that
compulsory licensing had positive effects on domestic innovation.
Even though my analysis suggests that compulsory licensing under the World War II
TWEA may have had positive effects on domestic innovation, my paper is neither in favor nor
against compulsory licensing. As past literature has shown, compulsory licensing is a complex
issue. Compulsory licensing not only affects countries whose property rights are violated, but it
also affects countries that use compulsory licensing to cheaply access foreign innovation. In
addition, compulsory licensing has both short-term and long-term effects on innovation activities.
Before any conclusion on the overall effects of compulsory licensing on innovation can be
reached, we need to carefully weigh the different effects of compulsory licensing on different
parties. I wish that my paper can contribute to current debates on compulsory licensing.
40
Stephanie Lee
May, 2011
Reference List
Alien Property Custodian of the United States. 1919. A Detailed Report by the Alien Property
Custodian of All Proceedings Had by Him under the Trading with the Enemy Act
During the Calendar Year 1918 and to the Close of Business on February 15, 1919.
Washington, DC: Government Printing Office.
Alien Property Custodian of the United States. 1943. Patents at Work: A Statement of Policy,
Washington, DC: Office of Alien Property Custodian.
Alien Property Custodian of the United States. 1946. Annual Report, Washington, DC: Office
of Alien Property Custodian.
Bird, R.C. and Cohey D.R. 2008. “The Impact of Compulsory Licensing on Foreign Direct
Investment: A Collective Bargaining Approach,” American Business Law Journal,
Summer 45(2): pp. 2-48.
Chaudhuri, S., Goldberg, P.K., and Jia, P. 2006. “Estimating the Effects of Global Patent
Protection in Pharmaceuticals: A Case Study of Quinolones in India,” American
Economic Review, December 96(5): pp. 1477-1514.
Chien, C.V. 2003. “Cheap Drugs at What Price to Innovation: Does the Compulsory Licensing
of Pharmaceuticals Hurt Innovation?,” Berkeley Technology Law Journal, Summer 18(3):
pp. 853-907.
Danzon P.M. and A. Towse. 2005. “Theory and Implementation of Differential Pricing for
Pharmaceuticals” in K.E. Maskus and J.H. Reichman, eds., International Public Goods
and Transfer of Technology under a Globalised Intellectual Property in Regime,
Cambridge, U.K: Cambridge Press.
Fisch, A.M. 1994. “Compulsory Licensing of Pharmaceutical Patents: An Unreasonable Solution
to an Unfortunate Problem,” Jurimetrics, Spring 34(3): pp. 295-316.
Foster, A.D. and Rosenzweig M.R. 1995. “Learning by Doing and Learning from Others:
Human Capital and Technical Change in Agriculture,” Journal of Political Economy,
December 103(6): pp. 1176-1209.
Harris, J.E. 2009. “Why We Don't Have An HIV Vaccine, And How We Can Develop One,”
Health Affairs, November 28(6): pp. 1642-1654
Irwin, D.A. and Klenow, P.J. 1994. “Learning-by-Doing Spillovers in the Semiconductor
Industry,” Journal of Political Economy, December 102(6): pp. 1200-1227.
41
Stephanie Lee
May, 2011
Kaiser Daily HIV/AIDS Report. 2007. “Thailand Will Maintain Compulsory Licenses for
Kaletra, Efavirenz, Despite Companies' Drug Price Reductions, Health Minister Says,”
Kaiser Daily HIV/AIDS Report, April 16.
Landau, N, Mowery, D.C., and Rosenberg N. 1992. Technology and the Wealth of Nations,
Stanford, California: Stanford University Press.
Lee, J.Y. and Mansfield E. 1996. “Intellectual property protection and US foreign direct
investment,” Review of Economics and Statistics, May 78(2): pp. 181-186
Miller, James. 2007. “Abbott to Cut AIDS Drug Cost in Poor Nations,” Chicago Tribune, April
10.
Ministry of Public Health and the National Health Security Office of Thailand. 2007. Facts and
Evidences on the 10 Burning Issues Related to the Government Use of Patents on Three
Patented Essential Drugs in Thailand, February.
Moser, Petra. 2005. “How Do Patent Laws Influence Innovation? Evidence from Nineteenth-
Century World’s Fairs,” American Economic Review, August 95(4): pp. 1214-1236.
Moser, Petra and Voena, Alessandra. 2010. “Compulsory Licensing: Evidence from the Trading
with the Enemy Act,” National Bureau of Economic Research Working Paper No. 15598,
January.
Scherer, F.M. 1977. The Economic Effects of Compulsory Patent Licensing (Monograph Series
in Finance and Economics, 1977-2). New York: New York University, Graduate School
of Business Administration, Center for the Study of Financial Institutions.
Schwartzman David. 1975. The expected return from pharmaceutical research: sources of new
drugs and the profitability of R & D investment, Washington, DC: American Enterprise
Institute for Public Policy Research.
Scotchmer, Suzanne. 2006. “Investing in Knowledge,” in Suzanne Scotchmer, ed., Innovation
and Incentives. Cambridge, Massachusetts and London, England: MIT Press, pp. 31-64.
Scotchmer, Suzanne. 2006. “On the Optimal Design of Intellectual Property,” in Suzanne
Scotchmer, ed., Innovation and Incentives. Cambridge, Massachusetts and London,
England: MIT Press, pp. 98-123.
Sommerich, O.C. 1955. “Treatment by United States of World War I and II Enemy-Owned
Patents and Copyrights,” American Society of Comparative Law, Autumn 4(4): pp. 587-
600.
42
Stephanie Lee
May, 2011
United States Patent and Trademark Office. USPTO Master Classification File. Retrieved
January 12, 2011. from http://www.google.com/googlebooks/uspto-patents.html.
United States Patent and Trademark Office Patent Technology Monitoring Team. 2009.
Patenting By Geographic Region (State and Country), Breakout by Technology Class,
Count of 1963 - 2009 Utility Patent Grants.
World Trade Organization. 2001. Ministerial Declaration, November 20.
