Patent breadth in an international setting

Abstract

This paper examines the Nash equilibria of a game where two national governments set patent breadth, which determines how di§erent an imitating Örmís product must be in order to avoid infringing on an innovatorís patent. The e§ect of broadening patent breadth is to increase the incentive to invest in R&D, which is the same e§ect as increasing patent length. However, unlike the e§ect on static e¢ ciency of increasing patent length, our results show that the e§ect of broadening patent breadth on static e¢ ciency is non-monotonic. As a result, under our North-South model where only the North can innovate, harmonization of patent breadth lowers world welfare. In our North-North model, where innovation can occur anywhere, we show that harmonization towards narrower patent breadth may raise world welfare.