This paper develops a simple duopoly model in which investments in Ramp;D and patents are inputs in the production of firm rents. Patents are necessary to appropriate the returns to the firm's own Ramp;D, but patents also create potential claims against the rents of rival firms. Analysis of the...

U.S. patent law protects only inventions that are nontrivial advances of the prior art. The legal requirement is called nonobviousness. During the 1980s, the courts relaxed the nonobviousness requirement for all inventions, and a new form of intellectual property, with a weaker nonobviousness...

This paper presents a model of sequential innovation in which industry structure is endogenous and a standard of patentability determines the proportion of all inventions that qualify for protection (in U.S. patent law this standard is called nonobviousness; in Europe it is called the inventive...