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Does strengthening intellectual property rights (IPR) in terms of a longer patent life induce more patents? This article investigates the responses of high-technology firms to Taiwan's 1994 patent reform. Empirical analyses reveal that firms' patenting propensity rose gradually before patent reform and showed an increase after patent reform, tending to support the viewpoint that stronger IPR can induce more patents. However, this cannot lead to lasting effect. Furthermore, patenting capability can serve as the access ticket for potential entrants to a science park under the circumstance of stronger IPR protections. These new entrants are found to have a better post-entry performance in patenting relative to the incumbents in the short run.
(JEL O14, 031)
ABBREVIATIONS
CAFC: Court of Appeals for the Federal Circuit
HSIP: Hsinchu Science Industrial Park
IC: Integrated Circuit
IPR: Intellectual Property Rights
LM: Lagrange Multiplier
NIEs: Newly Industrialized Economies
PML: Pseudo Maximum-Likelihood
R&D: Research and Development
TIPO: Taiwan Intellectual Property Office
TSMC: Taiwan Semiconductor Manufacturing Company
UMC: United Microelectronics Corporation
WTO: World Trade Organization
(ProQuest: ... denotes formula omitted.)
I. INTRODUCTION
Intellectual property rights (hereafter IPR) have stimulated great attention in the arena of international economic policy in past decades. Indeed, IPR laws and their enforcement differ widely across countries due to national differences in economic development. To strengthen and harmonize these means for protecting IPR, industrial nations have placed IPR on the top agenda in bilateral, regional, or multilateral negotiations. Advanced countries often contend that stronger patent protection would be good even for developing countries through stimulating more domestic innovations, as well as by attracting more foreign direct investments. Alternatively, some developing countries argue that an extension of IPR harms their technological progress. They would like to establish weaker regimes favoring technological diffusion through imitation and acquisition from abroad. This divergence in view on the effect of strengthening IPR between developed and developing countries has widened in recent years.
Although the real effect of IPR has attracted increasing empirical studies, numerous ambiguities and uncertainties remain in the literature, suggesting the need for future empirical works. Most previous studies focus on experiences in advanced countries, and there is little effort on exploring the effect of strengthening IPR for newly industrialized economies (NIEs) or developing countries.1 Under considerable pressure from the...