Compulsory Licensing and Domestic Innovation: Evidence from the Trading with the Enemy Act after World War II

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Abstract/Contents

Abstract: Compulsory licensing allows countries to produce patented foreign innovations without the consent of the foreign patent holders. During World War I and World War II, the Trading with the Enemy Act (TWEA) allowed the United States to vest all enemy-owned patents. The Alien Property Custodian systematically licensed the vested patents to U.S. firms. Moser and Voena (2010) found that compulsory licensing under the World War I TWEA increased U.S. domestic innovation by a minimum of 20 percent. My paper extends their analysis by examining how compulsory licensing under the World War II TWEA affected U.S. domestic innovation. During World War II, patents originally owned by Germany, Japan, and Italy were licensed to U.S firms. Did U.S. inventors face less economic incentive to produce domestic innovation because they could cheaply use foreign innovation after paying a low licensing fee? Or did compulsory licensing encourage domestic innovation (Moser and Voena, 2010)? For example, experience with producing foreign innovations could have encouraged the learning-by-doing of the compulsory licensees (Moser and Voena, 2010). To the extent that technologies were differently affected by the World War II TWEA, I use a difference-in-differences strategy to examine the effects of compulsory licensing on domestic innovation. My analysis provides evidence that compulsory licensing under the World War II TWEA had positive effects on domestic innovation activities.

Type of resource	text
Date created	May 2011

Author	Lee, Stephanie
Primary advisor	Moser, Petra
Degree granting institution	Stanford University, Department of Economics

Subject	Stanford Department of Economics
Subject	Alien Property Custodian
Subject	patent law
Subject	innovation
Subject	invention
Subject	learning-by-doing
Subject	Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Genre	Thesis

Related item	Title 2011 Firestone Medal for Excellence in Undergraduate Research
Location	https://purl.stanford.edu/xm378ff8816

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Preferred Citation: Lee, Stephanie. (2011). Compulsory Licensing and Domestic Innovation: Evidence from the Trading with the Enemy Act after World War II. Stanford Digital Repository. Available at: https://purl.stanford.edu/xm378ff8816

Stanford University, Department of Economics, Honors Theses

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