Seoul Journal of Economics - Vol. 26 , No. 1

[ Article ]
Seoul Journal of Economics - Vol. 26, No. 1, pp. 73-93
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 28 Feb 2013
Received 27 Jun 2012 Revised 29 Nov 2012 Accepted 30 Nov 2012

Responses of Incumbents to Patent Enforcement: An Examination of the Korean Case
Jun-Byoung Oh ; Changsuh Park
Corresponding Author, Associate Professor, Department of Economics, Inha University, Inha-ro 100, Nam-gu, Incheon 402-751, Korea, Tel: +82-32-860-7787, Fax: +82-32-860-7772 (jun@inha.ac.kr)
Associate Professor, Department of Economics, Soongsil University, Sangdo-dong, Dongjak-gu, Seoul 156-743, Korea, Tel: +82-2-820-0559, Fax: +82-2-824-4384 (cpark@ssu.ac.kr)

Funding Information ▼

JEL Classification: L5, L6, O3


Does stronger patent enforcement stimulate innovation activities? After the 1994 Korean patent reform, a substantial increase in the number of patent applications in the electronics and related equipment industries has been observed. This paper investigates how stronger patent enforcement affected the activities of firm innovation and whether the observed upsurge of patenting propensity is attributable to the increase in innovation activities. The regression results show that incumbents with large fixed capital strategically responded to patent enforcement by substantially increasing patent applications, but not research and development intensity. The results were consistent with the strategic response hypothesis and suggested that the 1994 Korean patent enforcement did not stimulate the innovation activities of firms.

Keywords: Patent reform, Innovation, Strategic response


Jun-Byoung Oh acknowledges the support of the National Research Foundation of Korea Grant funded by the Korean Government (NRF-330-B00093).

1. Chang, Ha-Joon, and Shin, Jang-Sup. “Evaluating the Post-Crisis Corporate Restructuring in Korea.” Seoul Journal of Economics 15 (No. 2 2002): 245-76.
2. Cohen, Wesley M., Nelson, Richard R., and Walsh, John P. Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not). NBER Working Paper No. 7552, 2000.
3. Dincer, Oguzhan. “The Effect of Property Rights on Economic Performance.” Applied Economics 39 (No. 7 2007): 825-37.
4. Gould, David M., and Gruben, William C. “The Role of Intellectual Property Rights in Economic Growth.” Journal of Development Economics 48 (No. 2 1996): 323-50.
5. Hall, Bronwyn H., Hausman, Jerry A., and Griliches, Zvi. Patents and R&D: Is there a Lag? NBER Working Paper No.1454, 1986.
6. Hall, Bronwyn H., and Ziedonis, Rosemarie H. “The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1975-1995.” Rand Journal of Economics 32 (No. 1 2001): 101-28.
7. Hausman, Jerry A., Hall, Bronwyn H., and Griliches, Zvi. Econometric Models for Count Data with an Application to the Patent-R&D Relationship. NBER Technical Working Paper No. 17, 1984.
8. Jaffe, Adam B. “The U.S. Patent System in Transition: Policy Innovation and the Innovation Process.” Research Policy 29 (No. 4 2000): 531-57.
9. Kanwar, Sunil, and Evenson, Robert. “Does Intellectual Property Protection Spur Technological Change?” Oxford Economic Papers 55 (No. 2 2003): 235-64.
10. Korean Intellectual Property Office. The Patent Trends in Korea. Seoul, Korea, 2007.
11. Korea Investors Service Inc. Financial Analysis System Database. Seoul, Korea, 2007.
12. Kortum, Samuel, and Lerner, Josh. “What Is behind the Recent Surge in Patenting?” Research Policy 28 (No. 1 1999): 1-22.
13. Lanjouw, Jean O., and Lerner, Josh. Preliminary Injunction Relief: Theory and Evidence from Patent Litigation. NBER Working Paper No. 5689, 1996.
14. Lerner, Josh. “Patenting in the Shadow of Competitors.” Journal of Law and Economics 38 (No. 2 1995): 463-95.
15. Mowery, David C., and Sampat, Bhaven N. “University Patents and Patent Policy Debates in the USA, 1925-1980.” Industrial and Corporate Change 10 (No. 3 2001): 781-814.
16. Pakes, Ariel, and Griliches, Zvi. Patent and R&D at the Firm Level: A First Look. NBER Working Paper No. 561, 1980.
17. Sakakibara, Mariko, and Branstetter, Lee. “Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms.” Rand Journal of Economics 32 (No. 1 2001): 77-100.
18. Yueh, Linda. “Patent Laws and Innovation in China.” International Review of Law and Economics 29 (No. 4 2009): 304-13.