IP, markets and diffusion

How are markets and diffusion relevant regarding discussions about IP?

Intellectual property rights and patents are essential to markets for technology and diffusion of innovation. IP rights also facilitate the diffusion of knowledge across borders, especially when knowledge is codified and hence easily imitable. It allows for both the disclosure and protection of technology.

What are the key policy dimensions regarding IP, markets and diffusion?
Common policy challenges include:
  • What are the issues that arise regarding patent pools with respect to competition? 
    (IP and competition)
  • What policies can help strengthen opportunities for businesses to obtain finance based on the IP titles they hold? 
    (IP and markets for finance)
  • What is the potential of open innovation for innovation in the 21st century? 
    (Open innovation)
What are the main policies that can help improve the contributions of markets and diffusion of knowledge to innovation?
Policies can help improve the contributions of IP, markets and diffusion of knowledge to innovation through:
- raising the awareness of companies and universities about the strategic opportunities offered by markets for IP (e.g. by providing relevant training courses)
- supporting trading mechanisms that facilitate the matching between supply and demand for technologies (e.g. licensing markets, university technology transfer offices,  patent auction houses)
- improving the provision of information on markets for technology (e.g. making licensing deals public in order to enable the identification of patent owners, advertising IP-protected inventions available for licensing by using online databases).
- supporting financing for businesses to develop innovations based on IP-protected inventions (e.g. through publicly-supported credit schemes)
- establishing standards and transparent methods for valuing patents
- improving conditions for markets for innovation finance.
- ensuring businesses face competitive market conditions so that they have incentives for innovation
- separating the competition authority and the IP office to avoid conflicts of interest 
- ensuring competition authorities monitor market developments and intervene where IP is used as a way to block competition.
  • Arora, A., Fosfuri, A., Gambardella, A. (2001), Markets for Technology: The Economics of Innovation and Corporate Strategy, MIT Press, Cambridge, MA.
  • Arrow, K.J. (1962), “Economic welfare and the allocation of resources for innovation”, in Nelson, R. (ed.), The Rate and Direction of Inventive Activity: Economic and Social Factors, Princeton University Press, Princeton, pp. 609-625.
  • Nelson, R.R. (1959), “The simple economics of basic research”, Journal of Political Economy, Vol. 62, No. 3, pp. 297-306.
  • OECD (2010), Knowledge Networks and Markets: A Typology of Markets in Explicit Knowledge Source, DSTI/IND/STP/ICCP(2010)3.
  • OECD (2004), Patents and Innovation: Trends and Policy Challenges, OECD Publishing. doi: 10.1787/9789264026728-en
  • Potter, J. (2005), “Local innovation systems and SME innovation policy”, OECD SME and Entrepreneurship Outlook, OECD Publishing, Paris, pp. 127-142.


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