SOCI 235 Lecture 7: 7
8 Jun 2018
School
Department
Course
Professor
SOCI 235 – Technology and Society
Generation of New Technology 3.0: Intellectual property and Innovation – September 25th
The rationale for intellectual property:
• Innovation often involves risk and cost
• Firms would be unlikely to incur the risk and cost of innovating if other firms could
immediately adopt the innovations they generate
• Therefore, granting a patent to an inventor that gives an exclusive right to produce or
use an innovation, or that allows the person/firm to license the innovation to another
firm in exchange for a license free of some other reward
Patents:
• Grants the patent holder the exclusive rights to innovation; includes the right to exploit
it or to license it
Intellectual property as an anti-competitive strategy
• First half of the 20th century, set of US producers of glass products formed a cartel –
Corning glass was a member
• Members of the cartel:
o Cross licensed technology
o Divided market segments among themselves
o Engaged in joint ventures
• Cross-licensing technology created a barrier to entry for new producers
1939 – US Justice Department filed a suit, claiming result of the cartel was:
• High prices
• Insuperable barriers to entry for new producers
• A slowing down to innovation – because the limited licensing of new technology also
limited the number of firms who might take the technology and improve it
The Case of Corning
Corning and other cartel members were found guilty, the Court require that:
1. The glass producers make their patents available on a royalty-free basis,
2. The futue pateted ioatios ee to e liesed fo a easoale oyalty,
3. The firms had to go further than licensing – they had to ake aailale daigs ad
pattes elatig to liesed ahiey o ethod used i a aufatue of glassae
On appeal, Supreme Court a) struck down the royalty-free licensing provision and, b) exempted
some patents from the decree – the est of the loe outs deisio stood
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Generation of new technology 3. 0: intellectual property and innovation september 25th. Patents: grants the patent holder the exclusive rights to innovation; includes the right to exploit it or to license it. Intellectual property as an anti-competitive strategy: first half of the 20th century, set of us producers of glass products formed a cartel . Corning glass was a member: members of the cartel, cross licensed technology, divided market segments among themselves, engaged in joint ventures, cross-licensing technology created a barrier to entry for new producers. 1939 us justice department filed a suit, claiming result of the cartel was: high prices, a slowing down to innovation because the limited licensing of new technology also. Insuperable barriers to entry for new producers limited the number of firms who might take the technology and improve it. On appeal, supreme court a) struck down the royalty-free licensing provision and, b) exempted some patents from the decree the (cid:396)est of the lo(cid:449)e(cid:396) (cid:272)ou(cid:396)t(cid:859)s de(cid:272)isio(cid:374) stood.
