Measuring and Modeling Trans-Border Patent Rewards

Patent rewards in countries with strong patent systems and economies serve as worldwide inducements for technological progress. Due to the national treatment provisions of leading patent laws – requiring that foreign inventors be treated equally with inventors who are citizens of the countries enacting the laws – foreign inventors and companies gain access to patent-mediated market controls and commercial rewards in the world’s strongest economies. The result is that the patent systems of our strongest economies such as the United States, Japan and the larger European Union countries serve as technology markets not only for inventors in those countries but around the world. Hence, inventors around the world (including in countries with substantively weak or poorly enforced patent laws) should look to patent filings and enforcement in the countries supporting the world’s great economies for innovation rewards. Conversely, the parties in these economies can look to innovators around the world for new technologies, provided that the parties in the leading economies are willing to pay for those new technologies through patent enforcement in the major economies. This article expands on this theme of trans-border technology flow and patent rewards through an empirical study of patenting in the United States by foreign inventors and companies. It treats such patenting as means for using United States markets and commercial gains to incentivize and reward foreign technology innovation. This study utilizes data on over 3 million United States utility patents to determine how domestic and foreign parties are using the United States patent system to gain controls over new technologies. The study compares the efficiency of various countries’ economies (on a per Gross Domestic Product (GDP) basis) in generating new technologies patented in the United States and realizing associated patent rights and innovation rewards. While this study focuses exclusively on practices involving foreign innovators patenting in the United States, the patterns identified are indicative of the rewards that are probably also being sought by international innovators through similar patent rights obtained in other major economies such as those in Japan and the larger European Union countries. The article also considers some of the normative implications of trans-border patenting as a strategic tool for companies and potential innovators in developing countries. It argues that