NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Joerg Baten

Eberhard-Karls Universitaet
Tuebingen
Germany

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NBER Working Papers and Publications

July 2015Does Compulsory Licensing Discourage Invention? Evidence From German Patents After WWI
with Nicola Bianchi, Petra Moser: w21442
This paper investigates whether compulsory licensing – which allows governments to license patents without the consent of patent-owners – discourages invention. Our analysis exploits new historical data on German patents to examine the effects of compulsory licensing under the US Trading-with-the-Enemy Act on invention in Germany. We find that compulsory licensing was associated with a 28 percent increase in invention. Historical evidence indicates that, as a result of war-related demands, fields with licensing were negatively selected, so OLS estimates may underestimate the positive effects of compulsory licensing on future inventions.
 
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