DIME Working Papers Series on Intellectual Property Rights

DIME (Dynamics of Institutions and Markets in Europe) is a network of social scientists in Europe, working on the economic and social consequences of increasing globalization and the rise of the knowledge economy. DIME is sponsored by the 6th Framework Programme of the European Union. The network brings together a wide variety of scholars, for example from economics, geography, sociology, history, political science and law.

The details and files download are available on the DIME website: http://www.dime-eu.org/working-papers/wp14

WP1: Emerging Issues in Intellectual Property Right Research

Birgitte Andersen, Birkbeck University of London

The IPR research questions that I believe are emerging, topical and key, are discussed in the following two sections. They address problems in relation to the institutional IPR environment, and Corporate and industry IPR practices, when profiting from inventions and innovations in technology and creative expressions.

WP2: University Research, Intellectual Property Rights and European Innovation Systems

Bart Verspagen, Ecis

This paper surveys the literature on university patenting. From the point of view of the economic theory of patents, it is argued that patenting knowledge developed by university researchers is paradoxical: patents are normally intended to stimulate knowledge development by providing property rights, but universities operate also under a different incentive scheme, i.e., they receive public funds to perform socially useful knowledge.

In the debate surrounding the so-called Bayh-Dole Act in the United States, it has, however, been argued that patents on university inventions may be necessary to stimulate technology transfer from universities to private firms. The first part of the paper addresses two major questions. First, what is the economic logic of Bayh-Dole, and, second, what were the effects on universities and the knowledge they develop.

In the second part, the paper addresses the issue of whether “Bayh-Dole-like” legislation would be beneficial for European countries. In a number of European countries, a suggestion has been made that this could enhance knowledge transfer from the public to the private sector. Using a new database resulting from a survey among patent inventors in six European countries, an assessment is given of the degree of university patenting in Europe. Because university researchers are often involved in patented inventions without the university being listed as a patent applicant, statistics based on the patent office databases alone often underestimate university patenting in Europe. The paper ends with a discussion of how this “European practice” of university patenting affects public-private knowledge transfer in Europe, and how this compares to the effects of the Bayh-Dole Act in the U.S.

WP3: Technological Knowledge as an Essential Facility

Cristiano Antonelli, Universita’ di Torino

The economics of regulation has articulated the notions of essential facility and mandated interconnection Their application to the governance of technological knowledge can be fruitful especially when implemented by the adoption of a compensatory liability rule and the parallel reduction in the exclusivity of patents.

Because knowledge is at the same time an output and an input in the production of new knowledge, exclusivity, traditionally associated to patents, is the cause of actual knowledge rationing with major drawbacks in terms of both static and dynamic efficiency. This institutional innovation can improve the governance of technological knowledge and increase both its rates of dissemination and generation.

Intellectual property rights have a twin effect on the economic system. On the one hand they favor the introduction of new technological knowledge. On the other they reduce competition and eventually may limit the rate of introduction of new knowledge. A trade-off takes place between such positive and negative effects. The application to the economics of knowledge of the notions of essential facility and liability rule can correct the balance of the trade-off and contribute the rate of advance of technological knowledge and its effective use in the economic system. The tuning of exclusive property rights makes it possible to minimize knowledge rents and favor the dissemination and use of knowledge in the economic system taking advantage of its intrinsic cumulability and complementarity.

WP4: Intellectual Property Tools, Standards and Market Positioning

Isabelle Liotard, University of Paris Nord CEPN

WP5: New Approaches to Intellectual Property: from Open Software to Knowledge-based Industrial Activities

Nicolas Jullien, M@RSOUIN/ ENST Bretagne
Jean-Benoît Zimmermann, CNRS/QREQAM et IDEP

We analyse the question of intellectual property in computer software, showing that both copyright and patents do not fit to the specificities and needs of this industry. The alternative model of Open Source Software, based on a very new juridical concept called GPL “General Public Licence”, tends to take a growing importance.

We explain its main characteristics, which consist in imposing the producers to disclose of both the source-code of the concerned programmes and any further improvement if they are re-distributed/re-sold. We show that by this process a totally different approach of intellectual property within industrial strategies is introduced, based on a weaker intellectual protection. We discuss the consequences of such a movement in institutional and public policy terms and we enlarge the approach to understand its exemplarity, in the context of a knowledge-based economy, for a growing number of industrial activities

WP6: IPR Developed by Public Researchers: The 3 Routes Available Under the Current Italian Legal System

Barbara Angelini, Italian National Reserach Council CNR
Francesco Saverio, Italian National Reserach Council CNRegal System

WP7: Industrial and Health Related Aspects of a Global IPR Regime in Developing Countries: Case Studies From the South

Samira Guennif, CEPN UMR-CNRSUniversite Paris 13

WP8: Can Intellectual Property Rights be Morally Justified? The Case of Human Gene Patents.

Theodoros Papaioannou, The Open University UK

In the IP literature, patents, copyrights, trademarks and trade secrets are considered to be statutory and moral ways of increasing innovations and boosting technological development. For this reason, individual rights to IP have been extended to almost all knowledge intensive sectors, including health care.

This paper draws on a recent study of the moral foundations of IPRs, examining the plausibility of patents, copyrights, trademarks and trade secrets in relation to four theories of liberal morality: natural law (Locke); personality development (Hegel); just reward (Nozick); and social utility (Bentham). Furthermore, the paper takes a closer look at the case of human gene patents in order to sustain the following argument: IPRs cannot be morally justified on the grounds of natural-law, personality development, just reward and social utility. Rather, they can be seen as particular political developments which aim to reproduce the social division of labour at regional, national, international and global levels.

WP9: The Effect of Strategic Patenting on Cumulative Innovation in UMTS Standardization

Rudi Bekkers, Ecis
Joel West, San Jose State University

Since the 1990s, intellectual property rights have become increasingly important in the telecommunications sector. In particular, the strategic role of patents played in the GSM standard irrevocably changed the IPR strategies within the sector, increasing both the revenues and barriers provided by telecom patents.

The issues raised by GSM foreshadowed comparable impacts of patents upon other ICT standards. These developments parallels broader concerns raised by researchers about the risk that such patents impede the process of cumulative innovation, a problem some have labeled “the tragedy of the anticommons.” After reviewing research on the various controversies regarding patents, cumulative innovation and standardization, we review the evolution of the role of patents in telecommunications standards.

We then analyze the role of 1227 unique “essential” patents declared in the standardization of Universal Mobile Telecommunications System (UMTS), the thirdgeneration successor to GSM. Using a combination of data sources, we show how differences in the timing, nature and scope of patenting activities relate to firms’ business models, competitive position and role in the standardization activity.

From this, we offer broader observations about the limits of existing IPR policies and coordination mechanisms, as well as the likely impact of various policy alternatives on patent proliferation in telecommunications standardization.

WP10: Value Creation from Patents: Empirical study

Ludmila Striukova, Roehampton University

The main aim of this article is to examine the role of governance structures in value creation from patents. We discuss in turn how value can be created when patents are co-owned, used in licensing-in, licensing-out or cross-licensing agreements or contributed to a patent pool.

Our analysis shows that non-market value embedded in patents is becoming more important for companies when they use their patents in cooperative governance structures. In addition, we empirically confirm that there is a relationship between the governance structures companies choose and the type of value they seek. Our analysis also shows that the choice of patent governance structures is based on the objectives of the company in terms of value creation.

WP11: Non Rivalry and Complementarity in Computer Software

Luigi Marengo, SSSUP Italy
Corrado Pasquali, Universita’ di Teramo Italy

In this paper we contend that – contrary to what argued by a vast part of the literature – computer software and, more in general, digital goods (i.e. symbolic strings on an electronic medium with some economic value) do not present the characteristics of a public good as they do not suffer from lack of rivarly and excludability any more than other durable goods which are regularly allocated on competitive markets.

We argue instead that the “market allocation problem” – if any – with digital goods does not arise from their public nature but from some peculiar characteristics of the production technology.

The latter presents the nature of a typical problem solving activity as far as the production of the first unit is concerned, this means that innovative activities in computer software are characterized by high degrees of interdependencies, cumulativeness, sequentiality, path dependence and, more in general, sub-optimality arising from imperfect problem decompositions. As far as the production of further units is concerned, we observe instead high (but not infinite) expansibility and perfect codification (lack of any tacit dimension) which make diffusion costs rapidly fall.

Given such claims, we argue that a standard “Coasian” approach to property rights, designed to cope with the externalities of semi-public goods may not be appropriate for computer software, as it may decrease both ex-ante incentives to innovation and ex-post efficiency of diffusion. On the other hand the institutional definition of property rights may strongly influence the patterns of technological evolution and division of labor in directions which are not necessarily optimal.

WP12: Patents, Inducement Prizes, and Contestant Strategy: Do Patents “Crowd Out” Prizes?

Jerome Davis, Dalhousie University Canada
Lee N. Davis, Copenhagen Business School

Debate over the merits of patents versus inducement prizes has tended to ignore the signaling roles of patents, and totally ignores the impact of patent signaling on prize contests. This paper asks: How does patent signaling affect the strategic choices of firms considering entering prize contests?

First, we consider contests that do not allow patenting, then contests that do. If patenting is not allowed, we argue, patent-holders, both internal and external to the contest, can adversely impact prize contests by claiming prize winner violation of their patents, and suing for damages. The likelihood of such challenges being made can deter entry, particularly in contests requiring large sunk costs. Furthermore, the firm’s decisionmaking process will discriminate against entering prize contests and favor R&D projects with patentable outcomes. Together, these problems may circumscribe any future wider role for prize contests, and limit their major putative welfare advantage: the ability to place prize winning solutions into the public domain. In contests where entrants may patent their inventions, entry is subject to basically the same problems as above (although such contests may carry some advantages as regards contest design). Our overall conclusion is that prize contests are liable to fail due to the lack of potential entrants, particularly as regards entry on the part of larger commercial firms.

WP13: The Economics of Digital Goods: Selling vs. Renting Music Online

Thierry Rayna, University of Bristol & GREQAM

The aim of this article is to use the concept of durable good to analyse the market of online music. Our goal is to find theoretical elements explaining the coexistence of selling and renting strategies, and to assess the respective performance of these two types of strategies.

In a first part, we make a review of the literature on the durable goods and show that even though renting the durable good is often the winning strategy in the case of a monopoly, in the case of an oligopoly, the selling strategy is usually better. We then study the market of online music and show that the reason behind firms’ decision to rent, rather than to sell, music is the presence of switching costs for the consumers. Both renting and selling strategies are then assessed, both theoretically and empirically, in regards to their robustness to piracy. Last but not least, the impact of durability on selling firms is also analysed.

WP14: Nanotechnology: the revolutionary technology seen from the U.S. and European perspective.

Luca Escoffier,Queen Mary IP Reserach Institute London

In nowadays knowledge-based society we are facing stunning developments in the technology sector and what this article will try to focus on is the burgeoning field of nanotechnology1 and nanofabrication. The former, actually, is known from the birth of the “new” chemistry2 whereas the latter is concerned with the manufacturing of nanomaterials and involves a kind of research whose roots go back to the early 1980s and which is putting under the spotlight many new strikingly impressive discoveries and inventions3 thanks to our finest researchers’ endeavours.

As we all know, though, technology cannot go further without proper investments, both form the public and private sector. In this paper, thus, we will see what are the nanotechnology-related governmental investment plans and especially those made by the US and Europe to foster this futuristic field of technology and what are the concerns which surround its usage and further development.

Nanotechnology is leading us to a new era made of tiny devices and “miraculous” compounds which will definitely change our lives. These inventions surely deserve IP protection but their very nature is raising many concerns among IP professionals since patent law has to be somehow interpreted in a new way due to their nature: the importance of patenting and its developments in this sector made by the USPTO and the EPO is what this article will try to investigate.

WP15: In Search of a Useful Theory of the Productive Potential of Intellectual Property Rights

Birgitte Andersen, Birkbeck University of London
Sue Konzelmann, Birkbeck University of London

It is a problem that mainstream theory, which has informed the belief systems regarding the operation as well as the predicted social and economic effects of IPR systems, cannot explain why the IPR system generates different performance results and varying potential for growth across the firms, sectors and nations participating in the IPR system.

This paper sketches a theory of the ‘Productive Potential of Intellectual Property Rights’ which is able to do just that. Focusing on the ‘rules of the game’ embedded in the institutional IPR environment and the ‘play of the game’ within the alternative institutions of IPR governance, the paper emphasizes the importance of the nature or quality of the relationships among IPR stakeholders and the contribution of such relationships to the processes of financial and non-financial value creation and distribution from IPRs. The central role of cooperation, asymmetric relationships, and the effective resolution of conflicting interests amongst stakeholders is addressed. It is suggested that the proposed framework provides a better starting point for the design of IPR policy and management.

WP16: The Impact of Internet on IPR – A Case Study of Music Industry in Croatia

Marta Bozina, University of Zagreb Croatia
Kosjenka Dumancic, University of Zagreb Croatia
Blazenka Knezevic, University of Zagreb Croatia

According to the International Telecommunication Union (ITU) there is a trend of rapid growth of Internet users in EU-candidate countries (Croatia, Romania, Bulgaria and Turkey), according to ITU reports, the number of Internet users has tripled since the year 2000. Nowadays, Internet is affecting and changing almost every industry in transitional countries.

The impact is most obvious in industries which deal with goods that can be easily digitalized and distributed online. Due to a large number of Internet users, network effects and accessibility of different easy-to-use software tools both for digitalization and distribution, music seems to be most exposed to Internet theft and piracy. In this paper the case of Croatian music industry will be discussed together with the legal framework regarding the issue of digital music.

WP17: Looking at Vuitton: Negotiating value and price of counterfeit merchandise in Shanghai’s Xiangyang market

Gard Hopsdal Hansen, Norwegian University of Science and Technology
Henrik Kloppenborg Moeller, University of Copenhagen

The paper examines how different notions of value are drawn into action in exchanges when people evaluate and negotiate ‘fake’ branded commodities at the Xiangyang market in Shanghai.

With a critical look into classical economic and sociological debates on how to perceive of value and its construction, we further explore how different values, and perhaps ontologies, of objects are continually (re-)negotiated and (re-)created in relation to rationalities inherent in different economic systems.

In discussing different economic rationalities as a base for comparison, we will also argue that the constructions of values of ‘fake’ commodities, though living their own ‘social lives’, are intimately intermingled in references to the social-symbolic values of the ‘real’ brands. The paper is based on empirical data gathered during six months of fieldwork, participant observation and interviews with vendors, customers and other actors engaged in the exchange of ‘fake’ and ‘real’ commodites. In addition to the more traditional research methods, we also conducted an experiment in which we purchased and used a ‘fake’ Luis Vuitton bag to collect and analyze various opinions and arguments regarding values, quality and price.

WP18: IPR Protection in the High-Tech Industries: A Model of Piracy

Thierry Rayna, University of Bristol

This article investigates the relation between the level of publicness of digital goods – i.e. their degree of non-excludability and non-rivalness – and the pirating behaviour of the consumers.

The main focus is put on the difference between the ex-ante level of publicness – determined by the anti-piracy strategies of the firms – and the ex-post level of publicness – which is a consequence of external factors such as the consumers network structure, the consumers sharing behaviour, etc.

The two models developed in the article detail the required conditions for anti-piracy strategies to be successful and show the influence of the environment on these conditions.

WP19: Patenting Race in a Genomic Age

Jonathan Kahn, Hamline University School of Law

WP20: Inventive Activities, Patents and Early Industrialization. A Synthesis of Research Issues

Christine MacLeod, University of Bristol
Alessandro Nuvolari, Ecis

The aim of this paper is to provide a roadmap to recent research on the role of patent systems in the early phases of industrialization. Perhaps surprisingly, no consensus has been reached yet as to whether the emergence of modern patent systems exerted a favourable impact on inventive activities.

However, the recent literature has shed light on a number of fundamental factors which affect the links between inventive activities and the patent system. The concluding section of the paper outlines some “history lessons” for the current debate on the role of Intellectual Property Rights in economic development.

WP21: The Economics Of University: A Knowledge Governance Approach

Cristiano Antonelli, Universita’ di Torino

University is becoming the beam of the new emerging mode of governance of the generation and dissemination of knowledge as it reveals remarkable institutional advantages both to provide a solution to the knowledge trade-off and to reduce agency costs.

The typical academic labor relation emerges as an appropriate institutional device to handle the principal-agent problems when creative talents are required.

The unique quasi-hierarchical setup of the academic system creates the supply of certified skills that are ready to operate on a professional base. Such academic consultants can be paid on an ex-post per job base matching their variable costs only. This supply leads to the creation of a specific market for research services where the demand is provided by the knowledge outsourcing of corporations.

WP22: The IPR strategies of the Italian National Research Council and its researchers’ motivations to file patents […]

Francesco Saverio Donadio, Italian National Research Council(CNR)
Barbara Angelini, Italian National Research Council(CNR)

WP23: Do firms patent to protect or transfer knowledge in support of their innovations? An analysis of the fourth UK Community

Odile E.M. Janne, Birkbeck University of London
Marion Frenz, Birkbeck University of London

This paper examines the role of patents in relation to the transfer and exchange of knowledge for corporate innovation. Studies on patents have mostly focused on the role of patents as an incentive for the creation of knowledge by offering a way to appropriate returns from innovation investments.

However, an explanation for the relevance of patents for firms may be broader than reducing the possibility of copying their innovations.

More recently it has been argued that patents may be considered a strategic asset used by a firm to signal its strengths, provide access to its own technology as well as obtain access to the technology of others. This would suggest that patents play an important role in promoting the transfer and exchange of knowledge. In this paper we investigate whether the use of patents to protect innovations and to participate in knowledge exchanges are complementary or substituting strategic activities of firms in their management of innovation. To investigate this, we utilise a comprehensive large-scale survey into firms innovation related activities, the fourth UK Community Innovation Survey. We use regression methods to examine the role of patents for knowledge transfer and exchange; and the impact of patenting, knowledge exchange and the interactions between patenting and knowledge transfer on firms’ innovation performance. Our findings suggest that firms that use patents have a higher propensity to exchange knowledge. Both, patenting and knowledge exchange is positively associated with innovation performance; however, we find only partial evidence for additional effects deriving from a combination of these two strategies.

WP24: Empirical Evidence On Copyright Earnings

Martin Kretschmer, Bournemouth University(UK)

The available quantitative data on authors’ and artists’ earnings come from three different sources:

(1) government statistics (census, labour market surveys, tax); (2) questionnaire surveys of specific professional groups; and (3) collecting society payments. For the purposes of assessing the possible contribution of copyright law to authors’ and artists’ earnings, two aspects are of particular interest. (a) The level and distribution of earnings for cultural workers, compared to other professions; (b) Earnings from the principal artistic activity compared to other sources of earnings.

In this paper, I primarily review data for the UK but draw on comparable studies in Germany and the US, two of the best researched cultural markets.

WP25: Free/Libre/Open Source Software (FLOSS): Lessons for intellectual property right management in a knowledge based economy

Nicolas Jullien, M@RSOUIN
Jean-Benoît Zimmermann, CNRS/QREQAM et IDEP

The aim of this paper is to focus on the emerging situation in which open source software is nowadays produced not only by individual developers but in a growing proportion by firms that hire programmers for their own objectives of development in open source or for contributing to open source projects in the context of dedicated communities.

As commercial firms it is important to analyze how and why they are capable of drawing benefits from such involvement and their connected activities.

Moreover, we want to stress the different types of business model these firms rely on and the possible evolution they are likely to follow in the near future. We shown how Open Source principles provide an alternative way of thinking and managing intellectual property that do not come up against the same problems but needs a radical change in the way of drawing commercial benefits from knowledge development tasks. Then we analyze the growing involvement of commercial actors by setting up a typology of the different business models that can be observed in the OS landscape, how they correspond to the different strategies of industrial firms according to the main characteristics of their technical skills and market position. Finally, in a conclusive section we will draw the main lessons of the FLOSS experience for a possible enlargement of those principles of IPR management and business to other knowledge based commercial activities.

WP26: The Political Economy of Patent Policy Reform in the United States

FM Scherer, Harvard University

During the 1980s and 1990s, important legislative, judicial, and diplomatic initiatives emanated from the United States, strengthening patent and copyright enforcement systems both domestically and in the broader world economy.

The political influences that led to these changes are interesting in their own right.1 Even more interesting, however, is the fact that governmental emphasis on patent systems increased in the wake of impressive new findings from economic studies showing that patents played a surprisingly minor role in well-established corporations’ decisions to invest in research, development, and technological innovation. The opposing movements of the political and behavioral science currents will be a principal theme of this article.

WP27: Trade Marks and Performance in UK Firms: Evidence of Schumpeterian Competition through Innovation

Christine Greenhalgh, Oxford University
Mark Rogers, Oxford University

This paper uses a novel data set of the trade mark activity of UK manufacturing and service sector firms to investigate whether applications for trade marks are suggestive of product innovation, improving the profitability and productivity of firms.

Data on both trade (and service) marks sought via the UK Patent Office (UKTM) and the European Community Office for Harmonisation of the Internal Market (CTM) are available. There was rapid growth in trade mark activity during the period covered by the data (1996-2000).

We first analyse Tobin’s q, the ratio of stock market value to the book value of tangible assets, as the market value of the firm should reflect the expected future return on intangible assets. We explore the impact of undertaking any trade mark activity and also the effects of increasing trade mark intensity among those who do. The results indicate that stock market values are positively associated with R&D and trade mark activity by firms. We find larger differences between firms with and without trade marks for services than for manufacturing. We also find bigger differences in Tobin’s q when the services firm is applying for Community marks, rather than just applying for UK marks. Increasing the intensity of Community trade marking appears to raise market value for both manufacturing and services, but this relationship weakened over the 1996 to 2000 period.

The second part of this paper investigates the relationship between trade mark activity and productivity, using a value added production function. The results indicate that firms that trade mark have significantly higher value added than non-trade markers (by between 10% and 30% across all firms). Our interpretation is that trade mark activity proxies a range of other, unobservable, firm-level characteristics including innovation that raise productivity and product unit values. We also analyse whether greater trade mark intensity raises productivity growth. Higher trade mark intensity has some positive association with productivity growth in services, but the results are relatively weak for manufacturing firms.

These results seem broadly consistent with those derived using the market value approach, suggesting that stock markets are efficient in estimating the likely benefits of new intangible assets, and that managers were not just seeking trade marks to follow a management fad, but could expect to receive real returns from innovative activity leading to new products requiring trade marks. Even so, the marginal returns to extra trade marks per firm were diminishing quite rapidly over the period, as indicated by our exploration of the interaction of time trends with trade mark intensity.

In the final section of the paper we examine interactions between firms IP activity to explore the nature of creative destruction and simultaneous growth via innovation. We find that, in the short run, greater IP activity by other firms in the industry reduces the value added of the firm, but this same competitive pressure has later benefits via productivity growth and this is reflected in higher stock market value. This describes the Schumpeterian process of competition through innovation restraining profit margins while increasing product variety and quality.

WP28: Forgetting History is Not an Option! Intellectual Property, Public Policy and Economic Development in Context

Christopher May, Lancaster University
Susan Sell, George Washington University

For over five hundred years, intellectual property has been an integral part of public policy and economic development.

From its early beginnings in fifteenth century Venice (where privileges were used to maintain technological advantage), through its early development when the British awarded monopoly privileges to those who introduced new techniques into the kingdom, and onwards to American policy purposely discriminating against foreigners in order to foster domestic innovation, policy makers have used intellectual property policy as a tool for economic development.

Our paper briefly traces parts of this history in order to highlight possibilities for autonomous intellectual property policies in the contemporary period. We stress that rather than a teleological history leading to the “perfection” of intellectual property rights in the Agreement on Trade-Related Intellectual Property (TRIPs), intellectual property’s history is patterned by a continuing argument over the balance between private rights and public benefits. This suggests a much wider range of possibilities for developing countries than merely the reproduction of TRIPs.

WP29: Cultural Diversity in an Era of Corporate Dominance: A Clash of Rights?

Fiona Macmillan, Birkbeck University of London

WP30: The Discovery of Invention Gene Patents and the Question of Patentability

Johanna Gibson, Queen Mary University of London

WP31: Dual Licensing in Open Source Software Markets

Stefano Comino, Universit’a di Trento
Fabio M. Manenti, Universit’a di Padova

In this paper we present a theoretical model to study the characteristics and the commercial sustainability of a particular open source strategy known as dual licensing. We show that the decision to employ a dual licensing strategy occurs whenever the the strength and the relevance of the contribution of the OS community is su±ciently large. This result points to the crucial role of OS licensing schemes for ¯rms embracing open source strategies, and can help explaining the observed proliferation of the open source licenses.

WP31: Does Open Innovation Foster Productivity? Evidence from Open Source Software (OSS) Firms

Elad Harison, University of Groningen
Heli Koski, The reserach Institute of the Finish Economy

Our study inquires whether the performance of software companies that have adopted a business model based on the supply of OSS significantly differs from the performance of firms that provide only proprietary software applications. We use survey data collected from 170 Finnish software companies and financial data collected from external sources to compare between the productivity of proprietary software and OSS producers. Further, we assess the impact of the services that OSS firms provide on their productivity. Our findings indicate that software firms that have chosen to apply the OSS business model had lower labour productivity than other firms. Additionally, OSS firms that provide a larger variety of services are found to have higher productivity than other OSSbased companies.

The paper provides possible explanations of those results and suggests new directions to expand the research on the relations between productivity, software development and use of proprietary vs. OSS applications.

WP33: Innovating without traditional intellectual property protection: comparing proprietary and FLOSS solutions

Dario Lorenzi, Polytechnic of Milan
Cristina Rossi, Polytechnic of Milan

The issue of innovation processes taking place in the software sector is currently widely debated. Challenging questions arise about what products/services have to be considered innovative, and whether a specific artefact is innovative or not. In this framework, the widespread success of the Free/Open Source Software (FOSS) put forward new research issues, dealing with whether and how programs developed according to the new production paradigm turn out to be more innovative than traditional ones. In this framework, this paper aims at contributing to the literature by addressing three main research questions: (i) are software solutions produced by Small and Medium Enterprises (SMEs) innovative? (ii) What kinds of innovations are implemented? And, finally, (iii) are programs based on FOSS more innovative than proprietary ones? Basing on a sample of 134 software solutions produced by Italian SMEs and using an original methodology to asses the problem of evaluating innovation in the software field, we provides some first insights of what emerges if we set aside the traditional innovation indicators and endower to build alternative metrics, specifically developed to target the complexity of the innovation processes in the software markets.

WP34: Self-governance in science: what can we learn from FOSS?

Margit Osterloh, University of Zurich
Roger Luethi, University of Zurich

Academic researchers regard themselves as members of a self-governed community. Scientists set goals, conduct research, publish findings and evaluate results according to community standards. In recent times, there have been growing concerns that decisions in science are influenced by outside interests that may not be aligned with the scientific endeavor. In particular, scholars have tried to address the effects of intellectual property rights on the scientific community. In this paper, we contrast science with Free and Open Source Software (FOSS), a community that grew out of academia to defend open science principles in one field. We find that FOSS may offer a model for better preserving – or even expanding – academic freedom

WP35: The Process of Innovation and Structure of the Open Source Software

Meera Sarma, University of London
Ed Clark, University of London

This paper explores the process of innovation within a virtual community of open source developers. We analyse a subgroup of the hacker community called the free and open source community as they possess unique structural and processual characteristics conducive to innovative product development. We propose a conceptual model of the innovation process and further examine the core and peripheral structure of the community and assess its impact on the innovation process.

This paper builds an initial understanding of how the hacker community is organized and how innovation occurs in the open source virtual environment. We show that the process of innovation is systematically different from other traditional patterns of innovation development. This enables us to hypothesize the behaviour of the open source community that leads to an understanding of the process of knowledge creation, through the characteristics and processes of the community.

We identify the core and periphery of the community as central to innovation in the virtual environment and thus provide a direction for further research.

WP36: Research Tool Patents and Free-Libre Biotechnology: A Suggested Unified Framework

Julien Pénin, BETA
Jean Pierre Wack, BETA

This paper proposes a unified conceptual framework to analyse the multiple role and consequences of patents in the case of biotechnology research tools. We argue that the knowledge/information and independent/complementary nature of research tools define heterogeneous frameworks in which the patent system plays different roles. In particular, using the analogy with the free-libre open source movement in software, we show that patents can promote open innovation by ensuring the freedom of some pieces of knowledge. A strong conclusion of the paper is therefore that, against common belief, an adequate use of the patent system may contribute to preserving freedom of access to upstream research tools within a framework that we call free-libre biotechnology.

WP37: The emergence of openness: How firms discover free revealing as a means to appropriate value

Joachim Henkel, Technische Universitat Munchen and CEPR
Simone Käs, McKinsey & Company

In open innovation processes, and notably in the commercial development of open source software, firms increasingly make some of their intellectual property freely and publicly available. This paper extends existing research on this topic by taking a dynamic perspective. We analyze what triggers the transition from ‘closed’ to ‘open,’ how openness evolves over time, how firms manage this shift, and what its implications for firm strategy are. For our study, we focus on driver software for computer components to be used with the Linux operating system. We use interviews, document analysis, and a survey to study this industry’s move to a higher level of openness. It turns out that Linux being open source software was not so much the reason for this increased openness, but rather a trigger to rethink engrained industry practice of overly strong protection. A feedback loop between increasing customer demand for openness and learning on the sellers’ side then set in. As a result, both value creation and value capture by the focal firm are potentially increased, and openness has emerged as a dimension of product quality in which firms compete.

WP38: Open Source Software: What we know (and do not know) about motives to contribute

Georg von Krogh, ETH Zurich
Sebastian Spaeth, ETH Zurich
Stefan Haefliger, ETH Zurich
Martin Wallin, ETH Zurich

Open source software is a major social and economic phenomenon that raises important questions about incentives and motivations in information systems development. For example, some software developers are unpaid volunteers who seek to solve their own technical problems, while others create open source software as part of their employment contract. For the past ten years, a substantial amount of academic work has theorized about and empirically examined developer motivations. We critically examine this work and show that it can be divided into two phases. In Phase One, scholars argued why developers contribute to open source software, while in Phase Two studies aimed at explaining the relationship between motivations of developers and institutional context characteristics such as community sponsorship or license restrictiveness. Based on research gaps and weaknesses in this work, we argue for entering a third phase of research that systematically integrates the social practice of software development and the institutional setting, in which open source software is embedded, with the types of motivations of developers. We apply the sociology of Alasdair MacIntyre to analyze the open source phenomenon and contribute a set of open research questions in Phase Three that we hope will sustain future research on open source software and allow it to flourish as it so far has.

WP39: The private costs of patent litigation

James E. Bessen, Reesarch on Innovation and Boston University School of Law
Michael J. Meurer, Boston University School of Law

This paper estimates the total cost of patent litigation. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. Even though most lawsuits settle, we find that the total costs of lawsuits are large compared to estimated legal fees, estimates of patent value, and R&D spending. By the late 1990s, alleged infringers bore expected costs of over $16 billion per year. These estimates support the view that infringement risk should be a major concern of policy.

WP40: A discursive approach to entrepreneurship and the emergence of organizational fields

Raghu Garud
Theresa Lant
Henri A. Schildt

The objective of this paper is to explain how emerging organizational fields influence entrepreneurial agency and, conversely, how such agency shapes emerging fields during upswing, downturn and stabilization periods. Adopting a discursive perspective, we explicate how shared symbols provide entrepreneurs resources to formulate and legitimize heterogeneous visions during upswing periods. During downturns, shared symbols lose their appeal, becoming liabilities for entrepreneurs who had used them in their narratives. Fields stabilize when narratives of valid and desirable practices converge, delegitimizing divergent practices.

WP41: Evolving networks and the finest in jazz

David Grandadam, BETA

Creativity is commonly viewed as a collective process involving the co- ordination of a variety of individuals who interact in a dense network and in uence one another through time. In this paper, we study the evolution of the network of collaboration among artists in the particular case of the Blue Note jazz label. By analyzing the extent to which the collaboration structure relies on a star production model and the extent to which it relies on integrated and cohesive groups, we examine how the label combined creativity and the market for creative ideas so as to guarantee its economic viability. We suggest that the di erent artists and styles should not be con- sidered as independent from each other, but rather should be considered as having emerged from an interconnected core. The Blue Note label has therefore been able to put forth simultaneously creative talents as well as established artists, which have all contributed in their own way to shape the evolution of jazz.

WP42: Testing the over- and under- exploitation hypotheses: bestselling musical compositions (1913-32) and their use in cinema

Paul J. Heald, University of Georgia

Some economists assert that as valuable works transition from copyrighted status and fall into the public domain they will be underexploited and their value dissipated. Others insist instead that without an owner to control their use, valuable public domain works will be overexploited or otherwise debased. This study of the most valuable musical compositions from 1913-32 demonstrates that neither hypothesis is true as it applies to the exploitation of songs in movies from 1968-2007. When compositions fall into the public domain, they are more likely to be exploited in movies, suggesting no under-exploitation. And the rate of exploitation of these public domain songs is no greater than that of copyrighted songs, indicating no congestion externality. The absence of market failure is likely due to producer and consumer self-regulation.

WP43: Game is not over yet: software patents and their impact on video game industry in Europe

Huang Yan, National University of Singapore

The paper conducts a review of patent protection of video game software, such as computer game engine, game methods and game concept. The paper compares the software patent protection schemes between the US and the EU, and points out that strong software patent protection for video games may intrude virtual world and stifle innovation. The paper believes that property rights in virtual worlds are really about social relations. Only when Europe has recognized the missions of patent protection and the features of the video game business, can it make its own satisfied legal arrangements of the social relations in the real-world, and achieve the goals set by itself in the political and cultural strategies.

WP44: Creativity and intellectual property in advertising industry. A case study from Turkey.

Ozlem Kacar Akman, Istanbul Bilgi University
Burhan Can Karahasan, Istanbul Bilgi University

Evolution of the unique place of innovation and invention is complemented by the recent discussions regarding the significance of creativity. While the industrialization process of nations and the endogenous growth theorists underline the need for the protection and subsidization of the innovation, we find it necessary to include the output of creativity into the process. The increasing role of creative industries both at the economical level and also at the social level, underlines the significance of intangible inputs of the process mainly the creator. Advertising sector, as one of the core sectors of the creative industry class, needs a distinct attention. Throughout the paper, the advertising sector in Turkey will be evaluated. In line with the legislative and institutional environment of Turkey, the protection of the creative ideas and the creators of advertising work will be discussed. While recent developments remark an improvement, we find it necessary to augment the discussion, by proposing more plain definitions in the legislative framework,

WP45: Swarm creativity. The legal and organizational challenges of open content film production

Irene Cassarino, Politecnico di Torino
Wolf Richter, University of Oxford

While the creation of software under the FLOSS paradigm is a well-established and recognized mode of production, the peer collaborative production of Open Content Film is a fairly new phenomenon. The two approaches share several common features: both are characterized by the massive collaboration of actors in a shared creative space and both are enabled by Information and Communication Technologies, in particular the Internet. But technology itself is not sufficient to create and maintain a shared creative space. A governance structure resting on a legal framework and a set of control and incentive mechanisms regulates the transactions between the collaborators and is designed to ensure coordination. In this paper we will outline the legal and organizational challenges faced by the first major Open Content Film production ‘A Swarm of Angels’ (ASOA) in creating and maintaining a shared space for collaborative film making. We will pay particular attention to the differences with the practices of the FLOSS community. The study will be based on a series of interviews with ASOA founder Matt Hanson and the major contributors to his project, the analysis of the discussion threads about the appropriate organizational and legal structure for this Open Film project, taken from the community’s online discussion forum, and the available legal documents governing membership in the ‘Swarm’. The discussion of the legal and organizational aspects is pivotal in the debate about whether a peer collaborative production model could be applied to other industries than software production, in particular to industries which involve not purely informational goods and hence rely on significant funding. The technology seems to be ready. The governance capabilities to take advantage of it maybe not.

WP46: What is critical to success in the movie industry? A study on key success factors in the Italian motion picture industry

Paolo Boccardelli, Luiss Guido Carli University
Federica Brunetta, Catholic University of Rome Sacro Cuore and Luiss Guido Carli University
Francesca Vicentini, University of Bologna and LuissGuido Carli University

Heterogeneity in firm performance has been investigated with different perspectives. Starting from the original contribution of Industrial Organization Economics, since the second half of ‘80s, scholars have pointed out an increasing role of firm-specific factors.

Amongst them, the role of human capital and knowledge-based resources are gaining increased attention. Accordingly, this is emphasized in creative industries where the relevance of intangible and experiential factors is one of the key issues to investigate competitive landscapes.

This paper investigates key successful factors in the Italian motion picture industry, with a major focus on human and relational capital as a driver of competitive advantage.

So far in the creative industries this concept assumes a particular relevance, taking into consideration that the know-how is often spread in social networks of professionals belonging to different communities of artists. Therefore, the capability of quickly reconfiguring these competences into specific projects is a critical issue (Lampel and Shamsie, 2000 and 2003). Moreover, intangible assets play an important role within these industries. Based on a research on more than one thousand movie projects produced in the Italian cluster, this paper tries to address the role of intangible factors in the motion picture industry.

WP47: Enterprise by ‘industrial’ design: creativity and competitiveness in the Birmingham (UK) Jewellery Quarter

John R. Bryson, University of Birmingham
Michael Taylor, University of Birmingham

This paper explores the manufacture of jewellery in Birmingham’s established jewellery quarter. The focus is on identifying and exploring the factors that lie behind the continued existence of this industry in Birmingham. Central to the survival of the industry has been the development of product-based competitive advantage constructed around creativity, customization, design and place-based reputations. Surviving jewellery firms have moved away from competing on price towards non-price based competition. This has meant that they have withdrawn from designing jewellery for mass production and, instead, are concentrating on high value added customised jewellery. This has important implications for intellectual property rights (IPR) in this industry as expensive customised designs do not require IPR protection. There are, however, longstanding IPR issues that still need to be addressed. Traditionally, jewellery was designed and manufactured in Birmingham but finished and assayed in London. This worked against the Birmingham jewellers as the London retailers purloined the design reputations of the Birmingham firms, and German manufacturers purloined their designs. This unequal relationship continues to occur. It provides Birmingham jewellers with a short-term advantage, but a persistent long-term disadvantage – they do not build place-based reputational capacity. The context for this paper is a concern with developing new accounts and theories that explain the role manufacturing contributes to the economies of the member states of the European Union. The focus is on the creative knowledges that manufacturing firms draw upon to ensure that they are able to compete by designing and manufacturing products in high cost locations. The paper is based on twenty-five five-to-face interviews with jewellery firms that have been undertaken over the last 12 months.

WP48: Digital Technologies and the conundrum of copyright and choreography

Tatjana Byrne, Birkbeck University of London
Soo Hee Lee, Birkbeck University of London

In the field of modern dance digital technology plays a significant role in the creative process. Increasingly it is being used to merge various art forms to enable the creation of new modes of expression. As digital dance becomes ever more interactive and collaborative traditional methods of recording and according authorship rights appear slow and costly. Policy vacuums and public funding pressures have left the sector vulnerable to commercial forces that whilst welcoming digital technology as part of the creative process also seek to gain advantage from the benefits it can bring in lowering the incremental costs of distribution. This brings an increased distance and anonymity between performer and audience that is intensified by the displacement not only of body, but also of experience. It is in this context that we explore the role

WP49: User-led innovation and the video game industry

Yuko Aoyama, Clark university
Hiro Izushi, Aston business school(UK)

In spite of the recent acknowledgements of “open source development” type of user-led innovation, our understanding is still limited as to its applicability and benefit. Particularly, from the viewpoint of firms making consumer goods, it remains unclear whether they can take advantage of peer-to-peer interaction and collaboration among consumers in the Internet era. Through an analysis of the video game industry, this article highlights its potential and limitations. The current hype of user-led innovation entails the risk of the concept’s being over-applied in terms of its applicability across industries and assumption of benefits. We argue that user-led innovation emerged out of not only technology-specific environment, but also culturally-specific context of industries. Our analysis shows that user-led innovation in its applications is likely to be constrained by the cultural context among other obstacles, thereby limiting its usefulness to a set of industries with particular characteristics.

WP50: Creativity in Second Life: the virtual world as a site of experimentation for fashion start-ups

Sofia Gkiousou, Birkbeck University of London

In this paper we propose that Second Life (SL) might be an ideal plateau for novice fashion designers to experiment in their milieu and gains skills in design and a variety of other fashion related activities such as marketing and customer identification. First, we address issues of demographics, social interaction and emotional involvement in SL. Second, we compare and contrast the fashion industry with the SL fashion industry in an effort to inform future research about the particularities of the SL market. Our analysis suggests that SL demographics and identity of residents may not be indicative of SL consumption and that SL fashion departs significantly from real life fashion in terms of fashion cycles, products and the characteristics of a fashion designer’s occupation.

WP51: Intellectual property rights and industry evolution: the case of the recorded music industry

Joseph Lampel, CASS business chool City University London
Ajay Bhalla, CASS business chool City University London
Pushkar Jha, Newcastle univesity business school

Intellectual property rights are often the mainstay of industry structure in industries where the value of products is strongly dependent on technological innovation and the creation of new content. However, producing novel intellectual property and then ensuring adequate returns on investment is subject to uncertainties such as new technologies, change in property rights regimes, and illegal reproduction. These uncertainties often create threats that impact industry evolution. Faced with threats to their core intellectual property firms engage in defensive and offensive strategies that change industry environment, often triggering strategies that lead to wholesale review of market position, and new relationships with suppliers and buyers. When the threat persists, firms are often forced to change their core operations, in the process adopting new technologies and redrawing industry boundaries. We use the case of music industry over the last century to locate these threats and discuss their impact on industry evolution. The creation and protection of copyright material has been central to the industry’s economic viability in the 20th and 21st centuries. Periodically, however, the industry has experienced threats to its ability to protect intellectual property. The response of the industry to the threat posed by each of these developments has exerted a powerful influence on the evolution of the music industry. We examine the variety of the strategic responses, and evaluate their impact to make sense of the current crisis facing the industry and the scenarios that describe the future for the industry.

WP52: Solutions to P2P copyright crisis

Xie Lin, Chinese University of Hong Kong

Recently, most countries face the problem of revising copyright law because of the introduction of Peer to Peer (P2P) technology on the internet which has badly aggravated the piracy of unauthorized file-sharing. This paper will first examine the traditional creative incentive theory of intellectual property under a new digital circumstance and find out the best position the law should take between P2P users, ISPs and copyright owners. It will discuss technology protection, fast piracy speed, new market models and free culture. Second, it will highlight and explain the legal uncertainties of primary and secondary liabilities. With regard to P2P users, it will review the dispute issues in Hong Kong Bit Torrent case, Tai Wan P2P case, discuss the tendency of other countries to revise unauthorized uploading and downloading liability. For Internet Service Providers (ISPs), it will explore four kinds of liabilities, contributory, vicarious, authorized and joint liabilities in representative jurisdictions, through studying series relevant cases, e.g. Grokster Case, KaZaa case. Third, it will compare scopes of these two liabilities with alternative solutions, in order to achieve an optimized model of solutions. Levy system, compulsory licensing and other possible solutions will be evaluated altogether. Considering the different legal traditions and national situations, the proposed solutions in different countries might be similar but not exactly the same.

WP53: Creativity in context: content, cost, chance, and collection in the cultural industries: examples from the film industry

Mark Lorenzen,Copenhagen Business School CBS

By combining economics, economic sociology, and economic geography literatures, the paper analyzes creativity at the industry level. It argues that the film industry is a paradigmatic example of how the organization of the cultural economy is shaped by balancing creativity with contextual issues. In the film industry, organization is far from determined only by creative concerns for content production: Issues of cost, chance and collection also play important roles. Through analyzing creativity and its context in the film industry, the paper explains the industry’s organization, and opens up for understanding its significant national and regional differences. Combining theoretical literature with literature on the film industry, the paper exemplifies how creativity, cost, chance and collection are balanced differently in different clusters. The analytical framework presented in the paper may also help to analyze creativity in other cultural industries.

WP54: Technology, copyright law and the future: the Australian contemporary music industry

Ben O’Hara, Music industry centre for performing ARts Box Hill Institute

WP55: Conditions of success and failure in collaborations between business firms and design consultancies: the designers’ perspective

Davide Ravasi, Bocconi University
Alessia Marcotti, Bocconi University
Ileana Stigliani, Bocconi University

Past studies have traced a link between the capacity to effectively integrate design into a company’s processes and strategies, and a company’s performance. While the benefits of design are widely acknowledged, however, less is known about how business firms may actually improve the likelihood that the collaboration with external designers will produce mutually satisfactory results. The issue is of no small importance, because successful collaboration between the field of enterprise and the field of design is crucial for harnessing creative talent along commercially and economically valuable projects. In this paper, we report results from a survey-based study of design consultancies in Italy. An analysis of our data surfaced attitudes and behaviors that seem to be more or less conducive to mutually satisfactory collaboration between designers and firms. Breakdown of data by type of client (large multinationals, small and medium enterprises, hi-tech, etc.) let us investigate possible elements of specificity among clients. In addition, indirect evidence of the success of the consultancies allowed us to identify different patterns of behavior (of the consultancies themselves) that might be related to their performance.

WP56: Monometapoly: the economic impact of the recording industry on the music market

Thierry Rayna, Imperial College London
Ludmila Striukova, University College London

With four major companies sharing more than 85% of the market share, the recording industry is one of the most concentrated industries. While this market concentration has been traditionally linked with high barriers to entry, recent technological changes have made these barriers almost disappear. Nonetheless, market concentration re- mains, mostly due IPRs protecting major companies. This has traditionally been considered acceptable due to the high sunk costs of music recording that prevent an ecient outcome in competitive environment. This article calls this traditional wis- dom into question and demonstrates that majors are not only monopolies but also monoposonies: they are monometapolies. Using analytical methods it is shown that the negative e ects of a monometapoly are worse than those of a simple monopoly and that the loss of welfare indirectly caused by IPRs is likely to be much higher than what is usually expected.

WP57: The dubbing standard: Its history and efficiency. Implications for film distributors in the German film market

Miika Blinn, Freie University Berlin

WP58: Control of creativity-dependent work settings. Direct and indirect effects of creative task characteristics on control system design

Isabella Grabner, Vienna University of Economics and Business Administration

In this paper the author develops a framework for management control in creativity-dependent settings. Combining creativity and management control research, task characteristics of creative work are identified and linked to formal and informal control mechanisms suggested in the management control literature and already applied in empirical studies on management control system design.

WP59: Global reuse and adaptation in the creative industries – Three further arguments against intellectual property based on lessons from China

Lucy Montgomery. CCi(London) QUT Australia
Jason Potts, CCi(London) QUT Australia

This paper reviews the theory of intellectual property (IP) in the creative industries (CI) from the open system evolutionary economic perspective. We argue that many current confusions about the nature and role of IP and dysfunctions of extant IP regimes in the CI can be traced to three widely overlooked aspects of the open system growth of knowledge context of IP in the CI: (1) the effect of globalization; (2) the dominating relative economic value of reuse of creative output over monopoly incentives to create input; and (3) the evolution of business models in response to institutional change. We conclude that a substantial weakening of copyright will, in theory, produce positive net public and private gain due to the evolutionary dynamics of all three dimensions.

WP60: Management Research Priorities in the Creative Industries: A Consultative Review

Jonathan Sapsed, CENTRIM University of Brighton
Juan Mateos-Garcia, CENTRIM University of Brighton
Richard Adams, Cranfield School of management
Andy Neely, Cranfield School of management

Following a ‘consultative review’ method this paper identifies management research themes on the creative industries, drawing on interviews and validation exercises with managers and creative professionals, and over 130 journal articles, books, reports and working papers from several related literatures. The themes identified are the following:

Integration and Disintegration: namely, the impact of digital tools and distribution, and collaboration and outsourcing relationships;

  • Understanding how Innovation Changes Business Models and Markets;
  • The Creative Process and Organisation;
  • Management Capabilities and Skills;
  • Small Firms and Growth.

Uniquely, the paper shows where research attention is needed, where it has focused so far, and where future investigation would best serve the concerns of practice, as well as theory. The paper shows that Intellectual Property is a high priority set of issues for managers and scholars, yet it is embedded within a broader tableau of forces and shifts.

WP61: Marketing Strategies for Protection of International TV Formats

Sukhpreet Singh, Bournemouth university

Commercially successful ideas in the creative world are often imitated or adapted. Television formats, in particular, are routinely copied. From early radio formats to game shows and reality programme formats of today, producers have accused others of “stealing”. Although formats constitute one of the most important exports for British TV producers, there is still no certainty about the legal protection of TV formats from copycat versions. Since TV formats fail to fall neatly within the definitions of protected material under international copyright and trade mark regimes, producers have been trying to devise innovative means to protect their formats from copycatting and plagiarism.

Though the globalization of cultural and entertainment markets may itself have contributed to the rise of TV formats, interconnecting programming industries in a world of multiplying channels, this paper theorizes that global broadcasting and programme marketing strategies can also be used by TV format producers to protect their intellectual property rights. Specifically, eight different strategies may be used: (a) trade show infrastructure and dynamics; (b) visual brand identity and channel fit; (c) brand extension and merchandising; (d) corporate branding; (e) national branding; (f) genre branding; (g) constant brand innovation; (h) fan communities.

The paper prepares the ground for evaluating the use and effectiveness of these eight strategies in preventing the copying of formats.

WP62: The value of European patents

Alfonso Gambardella, Bocconi University
Dietmar Harhoff, Universitat Munchen
Bart Verspagen, UNU-MERIT

This paper employs data from an extensive European survey to produce one of the first systematic assessments of the private economic value of patents. The estimated mean of our patent value distribution is higher than 3 million Euros, the median is about one-tenth, and the mode is around a few thousand Euros. This is in line with previous findings about the skewed distribution of patent values. Our measure is significantly correlated with the number of patent citations, references, claims, and countries in which the patent is applied. Citations explain value as much as the other three indicators combined, and the right tail of citations is correlated with the right tail of our value measure. Yet, the four indicators only explain 2.7% of the variance of patent value. Thus, while the use of these indicators as proxies for value, particularly citations, is justified by their correlations with it, they carry a significant noise. Moreover, after using country, industry, and technology fixed effects, we only explain 11.3% of the variance of patent value. The “measure of our ignorance” about the determinants of patent value is then still sizable, which calls for additional research to fill the gap.

WP63: Do trademarks and design registrations provide a better perspective on national innovation activity?

Finbarr Livesey, Institute of Manufacturing University of Cambridge
James Moultrie, Institute of Manufacturing University of Cambridge

When discussing intellectual property performance, patents usually dominate (Tether, 2007). The modes of protection more likely to be used in the creative industries, trademark and design registrations, are under studied and under reported(Schmoch, 2003, Mendonca, 2004). This may lead to a misunderstanding of the innovation impact of the creative industries, due to a bias in the indicators used, and also may be under representing indicators which may be closer to market indicators of innovation activity.

This study explores published evidence on patents, trademarks and design registrations over the period 1998 to 2002. There are significant contrasts between the relative levels of usage of all forms of intellectual property country-to-country, and notably, China is increasing its use of all forms over the period studied. Furthermore, evidence from the UK Community Innovation Survey indicates that trademarks may be a better discriminator between innovating and non-innovating firms. Finally, findings indicate that both design registrations and trademarks may be useful innovation indicators due to their closeness to market, accessibility and timeliness.

WP64: Mapping closed and open innovation practices: a comparison across nine countries based on micro-level innovation survey data

Marion Frenz, Birkbeck University of London
Ray Lambert, University and Skills(DIUS)

This paper sets about identifying different and complex innovation practices across nine countries by exploring data from firm level innovation surveys conducted in nine countries: Austria, Brazil, Canada, Denmark, France, New Zealand, Norway, South Korea and the United Kingdom. Our results suggest that innovating firms in these countries adopt one or more of the following innovation modes: (i) ‘new-to-market innovating’, (ii) ‘marketing based imitating’, (iii) ‘process modernising’, (iv) ‘wider innovating’. The extent to which IPRs, external technology, design or marketing activities play a role in these innovation practices, varies considerably across countries. For example, in Austria, Denmark and New Zealand diffused technology (externally acquired R&D) is used together with own technology in bringing about novel products, suggesting a more open innovation pattern. In contrast among firms in France, New Zealand and the UK we identify a greater reliance on IPRs (e.g. patents, copyrights and design registrations) while at the same time omitting externally acquired technologies. The latter may suggest perhaps a more closed approach to innovation among one set of firms.

WP65: An Exploration of Virtual Collaboration and the Implications for Open-Source

Andriani Piki, University of London
Meera Sarma, University of London

This paper explores the process of collaboration in virtual environments. Virtual collaboration relies heavily on electronic media and precludes the benefits of face-toface contact; yet it offers immense opportunities. The aim of this paper is to provide new perspectives on current research and highlight the key issues that require further investigation. Drawing from the available literature we explore how collaboration has progressed from co-located to virtual settings and we provide suggestions for dealing with the existing challenges. In this context, we will also examine how opensource software can be a viable tool for improving virtual collaboration practices.

WP66: Do technology diffusion theories explain the OSS business adoption patterns?

Heli Koski, ETLA The Research Institute of the Finnish Economy

This paper addresses the question of the software companies’ timing of adoption of the open source software (OSS) business models comprising the supply of OSS products and/or services. The game-theoretic technology adoption models do not explain well the observed diffusion patterns of the OSS business model among the sample of 716 European software firms. Instead, it seems that the network effects influentially shape the diffusion path of the OSS supply strategies. Our study further contributes to the technology diffusion literature as our econometric model aims at separating, unlike the previous empirical studies on technology diffusion, the role that the replacement effect has in the diffusion patterns of new technologies. Our data detect a clear replacement effect hindering the incumbents’ investments in new technology. The expected price declines of the computer programs – and thus the expected declining license revenues from the proprietary software – accelerate less the incumbent firms’ timing of adoption of the OSS supply model than that of the entrants.

WP67: Creativity and the public domain

Fiona Macmillan

WP68: Engineering vs. craftsmanship: Innovation in the electric guitar industry (1945–1984)

Thierry Rayna, Imperial College London
Ludmila Striukova, University College London

WP69: A survey of sources and databases of IP information

Grid Thoma, University of Camerino

WP70: A report of geographical coverage of IPR research

Rekha Rao, LEM

WP71: Intellectual Property Rights on Creativity and Heritage: the Case of the Fashion Industry

Christian Barrère, OMI, Universite de Reims

WP72: The Allocation of Collaborative Efforts in Open-Source Software

Matthijs den Besten, Oxford e-Research centre
Jean-Michel Dalle, universite pierre et Marie Curie Paris
Fabrice Galia, Burgundy School of Business and ERMES-CNRS

The article investigates the allocation of collaborative efforts among core developers (maintainers) of open source software by analyzing on-line development traces (logs) for a set of 10 large projects.

We specifically investigate whether the division of labor within open-source projects is influenced by characteristics of software code. We suggest that the collaboration between maintainers tends to be influenced by file vintage, by modularity, and by different measures of the complexity of the code. We interpret these findings as providing preliminary evidence that the organization of open-source software development would self-adapt to characteristics of the code base, in a stigmergic manner.

WP73: Which firms participate in open source software development? A study using data from Debian

Rishab Ghosh, UNU-MERIT
Kirsten Haaland, UNU-MERIT
Bronwyn H. Hall, UC Berkeley University of Maastrich NBER and IFS

WP74: Does Rule of Royalties Facilitate Dynamic Capability of Digital Distribution Management System?

Jong-Seok Kim, University of Manchester

WP75: The entrepreneur’s size limiting strategy: micro design businesses in London’s design cluster

Rachel Smart, Birkbeck College University of London

This research shows that some successful micro design entrepreneurs size limit as a strategic choice from the outset and regard this as beneficial to their firm, optimising operations for this size through the organisation of internal and external resources. The objectives are to achieve design quality and to exploit specialist skills within the work of the studio. Examination of their environment demonstrates the benefits of a clustered location, especially for start up businesses, although more established businesses are less reliant on proximity due to the strength of their professional and social networks. This paper concentrates on the formation of the entrepreneur’s design concept and business model and how this creates their strategy for their design firm, which includes size limiting as a component. Resulting typologies of micro design firms allow better understanding of the successful micro design entrepreneur in comparison to other micro design firms.

WP76: Author’s Right and Creativity Incentives: The Case of Gastronomy

Véronique Chossat, OMI research centre University of Reims

WP77: Relating social structure to technical structure: findings from the Linux kernel

Rishab Ghosh, UNU-MERIT
Paul David, Stanford university all souls college Oxford and UNU-MERIT

WP78: The Difference Principal? Shaping competitive advantage in the cultural product industries

Dominic Power, Uppsala University

This paper argues that due to the endless substitution possibilities open to consumers of cultural products, firms’ competitive advantage rests as much upon positionality and differentiation as upon traditional forms of intellectual property such as copyrights and trademarks.

However, the construction of positionality and differentiation may entail geographies and milieus other than those best suited to the origination and creation of cultural industry artefacts. The paper suggests that existing models of regional growth and innovation systems must be adapted to fit firms and sectors where competitiveness is not only based on traditional types of intellectual property (such as copyrights or patents) but also differential property (such as marketplace positionality). If providing a regional system supportive of differentiation (and market positionality) is important to these firms/industries then we must reappraise our notions of supportive regional conditions. To this end a revised version of the cluster model of regional competitive advantage is presented: one which attempts to be more tailored to industries where intellectual property and differentiation are the core products.

WP79: Putting a value on openness: the effect of product source code releases on the market value of firms

Oliver Alexy, TUM Business School Technische Universitat Munchen

Using the example of open source software, this study examines the effect of opening up the innovation process on the market value of firms. In a sample of 30 software companies in the time span from 1 January 1999 to 30 April 2007, I find that market valuation is strongly influenced by the business model firms choose for their open innovation efforts. The nonexistence of an explicit revenue model is punished by the capital market while firms whose efforts include an explicit revenue model achieve a premium on their stock price, confirming the potential for value-creation of open innovation efforts.

WP80: Intellectual property rights and ‘open innovation’ in services

Birgitte Andersen, Birkbeck University of London

In this paper it is argued that the evolution towards using the IPR system in support of ‘open innovation’ processes in services, based upon sharing information, knowledge, ideas and (cultural) expressions, has been led by firms and industry in their strategic interactive or collaborative IP management, rather than led by government policy designing the law and enforcement.

IPR legislation in its current form is providing very exclusive broad rights for a long period. Using an example of computer implemented inventions and innovations, the paper demonstrates how ‘open innovation’ processes in services can successfully be underpinned by the IPR system using both proprietary strategies and non-proprietary IPR methodologies regarding appropriate and less exclusive IPR protection and associated innovation management. Other elements related to the efficiency of the IPR system, such the functioning nature of the IP market place, for stimulating ‘Open Innovation’ in services are also highlighted.

WP81: New Moves in ‘Legal Jujitsu’ to combat the Anticommons. Mitigating IPR constraints on innovation thru a ‘bottom-up’ approach to systemic institutional reform.

Paul A. David, Stanford University and l’Ecole Polytechnique & Telecom-ParisTech

Most of the discussion and debate among legal scholars and economists concerning the so-called ‘anti-commons’ has been restricted to questions about the existence and seriousness of the obstacles to discovery, invention and innovation that Heller and Eisenberg (1998) suggested could result from “over-patenting” in the biomedical research area. But the anti-commons as a conceptualization of the perverse resource allocation effects of the distribution of private ownership rights has a considerably wider potential range of empirical relevance, and warrants commensurately more careful study. This paper underscores that analytical point first by considering a stylized model of the impediments imposed upon the conduct of research by the burdensome licensing charges that arise from the dispersed distribution of ownership rights in a multiplicity of research tools that are complementary. To make the structure of the generic argument clear, this heuristic analysis focuses multiple database resources as the “research tools” of interest, the individual access rights to each of which are in the hands of numerous intellectual property owners. Adopting that approach both recognizes the emergence and growing role of digital databases as critical facilities of the research infrastructure in many scientific and technical domains, and serves to demonstrate the generality of the phenomenon of “multiple marginalization” that emerges from the uncoordinated exercise of market power by individual rent-seeking rights-holders in setting licensing charges on their IP. Having briefly examined the relationship between that “core” phenomenon and other parts of the “anatomy of the anticommons,” the paper turns to examine it may be possible for market processes to correct the pathology. This portion of the paper briefly exposes a number of serious limitations of what might be thought of as the “spontaneous,” profit-driven institutional responses that might arise to mitigate the anti-commons – in imitation of the private copyright clearance agencies and music performance rights collection societies. If it is unreasonable to expect that effective remedial measures will not be forthcoming from that source, the case is strengthened for designing policies that would promote the contractual construction of “scientific research commons” by common-use licensing agreements among the owners of IP arising from publicly funded scientific projects.

WP82: The impact of music downloads and P2P filesharing on the purchase of music in Canada

Birgitte Andersen, Birkbeck University of London
Marion Frenz, British Institute of Technology and Ecommerce(BITE)

This study measures the extent to which free music downloads, including the use of P2P file sharing networks, act as substitutes or complements to music purchase in markets for CDs and electronic delivered music (such as MP3).

The analysis uses representative micro-data from the Canadian population. We find that those who participate in free music downloading and P2P file-sharing do not purchase more or less music compared with those who do not engaged in such activities, but that, indeed, very active file-sharers purchase more music relative to file-sharers who download fewer songs. Thus, the market substitution effect between freely acquired music and purchased music is smaller than the market creation and market segmentation effect from free music downloading. In essence, the behavioural incentives underpinning free music downloading are the effects of ‘unwilling to pay’ (market substitution), ‘hear before buying’ (market creation), ‘not wanting to buy whole album’ (market segmentation), ‘not available in the CD format or on electronic pay-sites (market creation)’.

WP83: Ideas for rent: an overview of markets for technology

Ashish Arora, Heinz School Carnegie Mellon University
Alfonso Gambardella, Bocconi University Milan

WP84: Emerging coordination mechanisms for multiparty IPR holders: linking research with standardization

Eric J. Iversen, Nifu Step Norway and the Australian Innovation Research Centre
Rudi Bekkers, Dialogic inovaatie & interactie and ECIS (NL)
Knut Blind, Berlin University of Technology and Fraunhofer Institute for systems and innovation research Karlsruhe

The standards setting process relies to an increasing degree on successfully integrating up-to-date research and development results. Successful interaction between research and standards can promote further innovation activity and provide important social benefits in general.

But, to do so, a number of challenges need to be faced. One key and persistent challenge is to provide the conditions in which the respective aims of formal standardssetting bodies and intellectual property rights can equitably be accommodated. This means balancing the collective gains to be reaped from the elaboration of a common standard against considerations to preserve the incentive of individual actors to innovate. This article focuses on approaches to the reemerging tension between intellectualproperty- rights and standards. It points to the importance that successful approaches can have to improve the interaction the between research and standardization activities. It then goes on to consider the (re)emergence of two approaches that are indicative of the changing relationship between intellectual property rights and standards-setting bodies.

WP85: User Communities and Hybrid Innovation Processes. Theoretical Foundations and Implications for Policy and Research

Dietmar Harhoff, University of Munich and CEPR
Philip Mayrhofer, University of Munich and CDTM

Based on the notion of heterogeneity and skill differentiation among users, we develop a typology of interactions between user communities and firms producing a product or service around which the community is centered. Hybrid innovation models are described as stable arrangements in which part of the innovation function is relegated to the user community, but the commercially oriented firm is capable of systematically and repeatedly appropriating monetary returns to the community-generated innovations.

This is distinct from pure need-voicing and user-help communities (where little innovative problem-solving is undertaken by the community) and from open-source communities where direct commercialization does not occur. We argue that highly sophisticated users will tend to solve their problems in an open-source or hybrid mode, while many less sophisticated users will not innovate, but may still deliver important need information to the firm. We also propose that there will be important behavioral differences between these communities. In our analysis of the hybrid innovation mode, we focus in particular on the question why the combination of a community and a commercially oriented firm can maintain stability over an extended period of time. We derive implications for firm conduct and user community management, as well as for public policies and further theoretical and empirical research.

WP86: IPR and “open creativity”: The cases of videogames and of the music industry

Laurent Bach, BETA
Patrick Cohendet, BETA and HEC
Julien Pénin, BETA
Laurent Simon, HEC(CANADA)

WP87: The economics of knowledge and the governance of universities’ third stream activities

Federica Rossi, Universita’ degli studi di Torino(IT)

In the course of the last few decades, universities have been increasingly involved in third stream activities, which often result in increased interactions with firms aimed at the creation, dissemination and exploitation of knowledge.

The purpose of this paper is to develop a theoretical framework in order to understand the economic incentives underpinning firms’ and universities’ mutual engagement in third stream activities, as well as the economic rationale underpinning the introduction of public incentives supporting these activities. The paper argues that the tools of the economics of knowledge and the conceptualization of knowledge production as an activity characterized by complexity, uncertainty, path dependency, idiosyncrasy and ambiguous appropriability conditions, can fulfill these objectives.

WP88: Intellectual Property (IP) marketplaces and how they work: Evidence from German pharmaceutical firms

Birgitte Andersen, University of London, Birkbeck College
Federica Rossi, University of Torino and University of London
Johannes Stephan, Technical University Freiberg

By exploring the patterns of engagement in several intellectual property (IP) marketplaces on the part of a sample of pharmaceutical firms based in Germany, the article attempts to shed light on the strategic reasons which induce firms to participate in different IP marketplaces and governance structures, often at the same time.

The scope of the analysis includes not only the conventional proprietary marketplaces (patents and copyright) but also non-proprietary marketplaces (open source and trade in non-patented technology). Marketplaces are viewed as institutions that allow firms to realize strategic value but which, due to institutional inefficiencies, may fail to deliver firms the benefits they seek. Therefore, the obstacles that prevent IP marketplaces from functioning smoothly and efficiently are also investigated.

The analysis suggests that different marketplaces and governance forms contribute to the realization of specific forms of value for firms, and suffer from specific failures. In-depth investigation and comparison of IP marketplaces and governance forms is therefore a promising and useful area for policy-relevant research.

WP89: Proprietary and non-proprietary intellectual property marketplaces: Their functioning and efficiency as experienced by UK software firms

Birgitte Andersen, University of London, Birkbeck College
Ainurul Rosli, University of London, Birkbeck College
Federica Rossi, University of Torino and University of London
Waraporn Yangsap, University of London, Birkbeck College

By exploring the patterns of engagement in several intellectual property (IP) marketplaces on the part of a sample of software firms based in the UK, the article attempts to shed light on the strategic reasons which induce firms to participate in different IP marketplaces and governance structures, often at the same time.

The scope of the analysis includes not only the conventional proprietary marketplaces (patents and copyright) but also non-proprietary marketplaces (open source and trade in non-patented technology). Marketplaces are viewed as institutions that allow firms to realize strategic value but which, due to institutional inefficiencies, may fail to deliver firms the benefits they seek. Therefore, the obstacles that prevent IP marketplaces from functioning smoothly and efficiently are also investigated.

The analysis suggests that different marketplaces and governance forms contribute to the realization of specific forms of value for firms, and suffer from specific failures. In-depth

WP90: Beyond Bayh-Dole: Universities and the use of Proprietary and Non-Proprietary Intellectual Property (IP) marketplaces

Birgitte Andersen, University of London, Birkbeck College
Federica Rossi, University of Torino and University of London, Birkbeck College

Building upon an original survey of universities in the United Kingdom, this paper brings an original perspective to the debate on the motivations and effectiveness of academic patenting, and on the exchange of intellectual property (IP) using different protection mechanisms.

It seeks to analyze the extent to which the assumptions underlying the legislation that encourages the patenting of academic research outcomes on the part of universities (such as the much debated Bayh-Dole Act in the US) are justified. It does this by exploring the motivations (related to finance, innovation, strategic relationships, competitive advantage) underpinning the universities’ choice to engage in IP marketplaces. The paper also explores whether universities support the view, implicitly held by mainstream economics, that the patent marketplace is efficient or works automatically. It does this by investigating the obstacles (related to market search, transparency, contract negotiation and enforcement, as well as regulation problems) that are encountered when exchanging IP.

By considering a wide range of IP marketplaces (patents, copyright, open source and non-patented technology) and IP governance forms (e.g. alternative licensing forms), the paper builds a more complete picture of the activities and experiences of universities than that provided by the existing literature on university knowledge transfer, which usually focuses on just two main channels for IP transfer, namely patents and publications. This approach allows us to investigate questions such as: are patent rationales related to enhanced knowledge transfer and income generation also applicable to other non-proprietary IP? Do problems underpinning the patent marketplace also affect other forms of IP? Does the use of different IP marketplaces and of different IP governance forms confer specific advantages or obstacles to universities?

WP91: Harnessing the ‘essential tension’ of design: The complex relationship between the firm and designer consultants

Andrea Filippetti, University “La Sapienza” of Rome and Birkbeck College – University of London

A central factor which characterizes design-related innovative activities is that a major source of knowledge – that is designers – is very often located outside the firm. This raises a central management issue for the firm and unavoidably generates a tension between designer consultants and the firm which I name the essential tension.

The aim of this paper is to shed some light on this complex relationship on the ground of the evidence provided by a multiple case study. The findings confirm that designer consultants can make a substantial contribution in enhancing firms’ innovation capabilities. We show that a better understanding of the types of knowledge that designers need for their activity is key. This affects the way designer consultants are integrated within the organizational structure of the firm, and it also impinges on the strategies put forward by firms to manage this relationship in order to gain a competitive advantage driven by innovation. Implications include the crucial role played by the product manager, the strategies to foster trust and to coordinate designers.

WP92: The role of design in firms’ innovation activity: A micro level analysis

Andrea Filippetti, Italian National Research Council – CNR – IRPPS, University “La Sapienza” of Rome and Birkbeck College – University of London

The empirical literature investigating the issue of the heterogeneity across firms has proposed the concept of innovation modes. This aims at grouping firms depending on a number of innovation characteristics. The role of design as a source of innovation has been largely disregarded.

The aim of this paper is to fill this gap as it i. seeks to identify the main characteristics of firms which rely on design for their innovations; ii. aims to bring the role of design within the framework provided by the literature on the innovation modes of firms. Design activity is predominant in firms characterized by: i. complex innovation strategy, and ii. intense interaction with the external environment. Investment in design it is associated with higher performance of the firm.

WP93: Shackling the Digital Economy means Less for Everyone: Why the DIGITAL ECONOMY ACT is bad for the music industry and the digital economy

Birgitte Andersen, University of London, Birkbeck College

This article debates the policy measures designed to curb P2P file-sharing on the Internet. In doing this, the article challenges the Digital Economy Act which was passed through the UK Parliament April 8, and entered into force June 12, 2010.

WP94: Incentives and Obstacles in the Patent Governance of UK ICT Firms

Ainurul Afizah Rosli, Birkbeck, University of London, UK

This paper explores how firms exploit the patent marketplace to organise their strategic value creation using different patent governance forms. The focus is on how firms use the patent marketplace (through buying, selling, licensing, cross-licensing or pooling) to realise specific forms of strategic value (related to financial and non-financial strategic aims). The patent marketplace is an institution where knowledge assets are exchanged for value creation. Therefore, understanding the functionality and efficiency of the patent marketplace is important for value creation. The case study – based on thirteen UK ICT firms – explores the firms‟ patent governance, their behavioural patent incentives and the market obstacles they have experienced. This paper shows that patents are exchanged through specific forms of patent governance (such as buying, selling, out or in-licensing, cross-licensing and pooling) in order to realise specific kinds of strategic value. However, institutional inefficiencies may hamper the value creation process. Therefore, the obstacles that prevent the governance within the patent marketplace from functioning smoothly are also explored.

WP95: Inefficiencies in Markets for Intellectual Property Rights: Experiences of Academic and Public Research Institutions

Birgitte Andersen – University of London, Birkbeck College
Federica Rossi – University of Torino and University of London, Birkbeck College

Universities’ involvement in the use of formal intellectual property rights (IPR) such as patents and registered copyright has increased steadily in the last two decades. Mainstream arguments, embedded in economic theory and policy, advocating the application of IPR protection to academic research results are based on the view that IPR marketplaces work well and allow universities to reap significant benefits. However, evidence based research to justify or critically evaluate these claims is lagging behind.

Building upon an original survey of 46 universities and public research organizations (PROs) in the UK, this paper analyzes the quality of the institutions underpinning markets for patents and copyrights with respect to IPR transactions between ‘universities and PROs’ and the users of the academic research base (mainly firms, but also other public bodies). The inefficiencies in markets for patents and copyright which are analyzed in this paper – and which lead to underperformance of the IPR system – include: (i) IPR market failures with respect to: IPR and client search processes and IP value transparency; (ii) institutional failures with respect to enforcement and regulation; (iii) failures experienced in IPR price negotiation processes; and (iv) uncertainties reflected in the perception of the economic value of the IP and the relationship with R&D cost. The analysis pays particular attention to the role of IP governance forms (e.g. alternative types of licensing agreements) through which IPR exchanges take place.

We find that universities report a high degree of “market failures” when exchanging patents and copyright. They reject the assumption of perfect information or transparency with respect to accessing the economic value of patents and copyright. Furthermore, because of the difficulty in agreeing on the value of the IPR, there are substantial difficulties in the negotiation of the price, so that the market does not clear very easily. Universities consider “institutional failures” to be less problematic, although universities do report problems in negotiating the terms of the IPR contract, and with regard to cost and difficulty of enforcing the IPR, when using particular IP governance forms. In general, IP governance forms matter for the types of market obstacles that are encountered during IPR transactions.

While some inefficiencies could be reduced via interventions aimed at increasing the circulation of information and transparency in IPR markets, some other inefficiencies seem to be closely linked to the economic properties of knowledge and as such very difficult to reduce. Given the importance of widely disseminating university research outcomes, in order to foster innovation and economic development, the persistence of these inefficiencies suggests that these objectives may be more properly obtained by openly disseminating knowledge, rather than government policies encouraging privatization of academic knowledge as a best practice.

WP97: Open source innovation: Towards a generalization of the open source model beyond software

Julien Pénin – BETA, CNRS-UMR 7522, Université de Strasbourg

This paper investigates the possibility to export the free-libre open source model that has proved successful in the case of software in other sectors. We propose a general definition of open source innovation that relies on two pillars: Openness and interactivity. First, the produced knowledge must remain open, i.e. it must be made available to all without discrimination. Second, actors of the innovation process must develop ongoing interactions in order to sustain a “bazaar” mode of knowledge production (Raymond, 1999). Open source innovation is therefore very different from open innovation (Chesbrough, 2003). We also discuss the possibility to use intellectual property rights, and patents in particular, in a copyleft way in order to secure open source innovation. Then, we investigate the contexts in which open source innovation might be successful. We argue that it may be especially promising when envisaged as providing an upstream platform of open knowledge in which firms can tap in order to develop downstream applications. We conclude by presenting two examples that fit our definition of open source innovation: The case of open source biology (Hope, 2008) and the case of creative industries (Bach et al., 2010).