Characteristics of an Ideal System of Intellectual Property Protection: The Case of the America Invents Act and its Impact on Innovation

Abstract

In this thesis I explored which criteria should be present in a system of Intellectual Property protection to foster innovation in the ideal way. For this purpose, a specific case was assessed, namely the America Invents Act (AIA), a US federal statute that came fully into effect in 2013. Due to the AIA’s relative recent introduction, this thesis constitutes the first empirical assessment of the Act. Based on the proxies used for innovation - R&D expenditure, the R&D funds to sales ratio and patents - I find that the AIA had a significant positive effect on innovation in the US overall. Contrary to literature which projected a negative impact of the AIA on small companies, I find no significant impact. The assumed consequence, that medium & large companies were positively impacted by the AIA was however confirmed. This can be explained by the switch from the first-to-invent to the first-to-file system. Building on literature that implies a stronger impact on companies/industries that are more exposed to IP litigation, I find that on the contrary, that only industries which are less exposed to litigation experience a significant positive impact. Finally, I show that the passing into law of the AIA hasn’t succeeded in curbing the operations of non-performing entities, or patent trolls, backed up by the results of an event study.