Patent Scope, Antitrust Policy, and Cumulative Innovation

This paper presents a model of cumulative innovation to investigate what factors should influence a court's decision when a patentee alleges that another inventor has infringed the patent with an improved version of the patented product. The model reveals how the optimal patent policy would extend broad protection to those inventions that have very little value (standing alone) relative to the improvements that others may subsequently invent. This paper also examines whether courts should allow a patentee and competing inventors with improved versions of the patented product to enter collusive agreements. The model indicates that such a policy could create incentives for inefficient entry by imitators who "invent around" the original patent