Heidi Williams (MIT) will present:
"How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome"
at 12pm on Thursday, February 5, 2015 in Rocky 2

***If you will be attending the Lunch Seminar and have not already done so, please RSVP so we may order the appropriate amount of food***

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                                                                    Abstract
In markets where innovation is cumulative, in the sense that discoveries are inputs into follow-on discoveries, optimal patent policy in part depends, on how patents on existing technologies affect follow-on innovation. In this paper, we investigate whether patents on one specific technology - human genes - have affected follow-on scientific research and product development. Using administrative data on successful and unsuccessful patent applications submitted to the US Patent and Trademark Office, we link the exact gene sequences claimed in each patent application with data measuring gene-related scientific research (publications) and commercial investments (clinical development). We first document evidence of selection into patenting: in the full sample of human genes, patented genes appear more valuable than non-patented genes prior to being patented based on measures of both scientific and commercial value, thus motivating two quasi-experimental approaches. First, we present a simple comparison of follow-on innovation across genes claimed in successful versus unsuccessful patent applications. Second, we use the "leniency" of the assigned patent examiner as an instrumental variable for whether the patent application was granted a patent. Both approaches suggest that on average gene patents have had no effect on follow-on innovation. Our confidence intervals on these estimates are meaningfully precise: we are able to reject the effect sizes estimated in past papers investigating the effect of non-patent forms of intellectual property on follow-on innovation.








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