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Title: Compulsory Licensing Evidence from the Trading with the Enemy Act

Citation Type: Conference Paper

Publication Year: 2008

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Abstract: Compulsory licensing, which is permissible under the Trade Related Intellectual Property Rights (TRIPS) agreement, allows domestic firms to produce inventions that are patented by foreign nationals, without the consent of patent owners. As an emergency measure, compulsory licensing offers clear benefits: it helps to deliver life-saving drugs to millions of patients. In the long run, however, the threat of compulsory licensing may reduce access to foreign technologies as it discourages foreign inventors to transfer inventions into the country. But, at the same time, compulsory licensing may generate domestic invention if experience with producing foreign inventions creates opportunities for learning and follow-up inventions. This paper uses an exogenous change in compulsory licensing as a result of World War I to measure the policys effects on domestic invention. Specifically, we compare changes in patents by domestic inventors across technologies that were differentially affected by compulsory licensing under the Trading with the Enemy Act (TWEA). Our data suggest that compulsory licensing has a large positive effect on domestic invention. Moreover, the effect increases with the intensity of treatment. The effect takes almost 10 years to fully materialize, which suggests that the effects of compulsory licensing may be missed in analyses of contemporary data.

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Authors: Moser, Petra; Voena, Alessandra

Conference Name: Stanford University, Department of Economics

Publisher Location: Stanford University, Palo Alto, CA

Data Collections: IPUMS USA

Topics: Other

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