Intellectual property protection in the form of secured patents has played an integral role in the growth and advancement of the biotechnology industry. The protection of intellectual properties is considered very important asset in this evolving industry. As a result, patent disputes often end up in the courts with long lasting consequences. Here we examined two recent and highly publicized patent dispute cases, namely, Mayo Collaborative Services et al. v. Prometheus Laboratories, Inc. (2012) and Association for Molecular Pathology et al. v. Myriad Genetics (2011), and wish to assess how the rulings will impact diagnostics and personalized medicine industries. In doing so, we learned that decisions involving patents are complex and interconnected, with previous court rulings influencing subsequent cases. It also became clear that in general, the biotechnology industry favored patent protection while healthcare providers and their patients favored less stringent patent protection. The case is made by the biotechnology industry that the current system has allowed both the diagnostics and personalized medicine industries to flourish. Patents are a crucial incentive that not only promotes but also protects innovation. Any disruption on the legal front with regards to patents will have a negative effect. On the other hand, healthcare providers and their patients voiced their concerns that the current system limits the affordability and accessibility of healthcare. Patent protected drugs are often expensive, making it difficult for some patients to afford. In addition, these drugs have no generic counterparts and are often without alternatives, limiting their accessibility. The providers and their patients argue that relaxing the current regulations is needed and that doing so will not impact innovation. It is believed that increased competition will have a two-fold effect—driving down prices and forcing innovation as a means of differentiation. In the end, the decisions themselves have provided little guidance regarding how the biotechnology industry should proceed, but this much is clear—a balance needs to be struck between the two opposing viewpoints for the biotech industry to survive and continue to grow.

<p><p>This work analyzes the impact of regulation policies in two distinct settings.</p><p><p>Chapter 1 provides an overview of the existing theoretical literature on innovation and entrepreneurship. It summarizes some of the main findings of the effect of various means of protecting intellectual property on the innovation incentives and the level of entrepreneurship activity. A general observation is that much of the existing work compares the extremes of no protection and perfect protection and the resulting prediction is that perfect protection leads to higher innovation incentives. This is puzzling in light of the empirical evidence that shows the opposite trend. Chapter 2 explicitly takes into account the fact that patent protection is imperfect and likely to lie in between the two extremes. In addition, in more than 70% of infringement cases in the U.S., infringement damages are calculated according to the so-called reasonable royalties rule that essentially awards a portion of the imitator's realized revenues to the innovator. I show that incorporating these two facts result in a non-monotonic relationship between the patent strength and R&D investment if one moves from zero protection to perfect protection in a continuous way. The intuition is that when protection is less than perfect, though not zero, equilibrium may involve both imitation and damages. Viewing damages as an alternative source of profits, the innovator may be less aggressive in pursuing R&D as patents become stronger. This result has important welfare implications. Besides the well-known effect of reducing welfare due to less competitive markets, stronger protection can further curtail welfare by decreasing R&D investment.</p><p><p>Chapter 3, coauthored with Professor Huseyin Yildirim, studies situations, in which one buyer sequentially negotiates with multiple suppliers to acquire goods or services that are either complements or substitutes to each other. We find that the buyer weakly prefers private negotiations because it creates strategic uncertainty about the outcomes from earlier negotiations, leading to less aggressive pricing. For substitutes, this strategic uncertainty is more beneficial for short expiries because long ones allow purchasing decisions to be made after all negotiations are over, creating enough competition on their own and leading to Bertrand prices. In contrast to substitutes, for which suppliers are in direct competition, complements create incentives for suppliers to coordinate their prices to extract the additional surplus resulting from the complementarities of their goods. In this case, introducing uncertainty through privacy is more beneficial for the buyer as suppliers' bargaining powers increase vis-á-vis the buyer because it creates greater coordination concerns. This leads to a somewhat surprising result that the buyer could benefit from negotiating with more powerful suppliers. The model enables an evaluation of certain laws and regulations that govern bilateral negotiations. For instance, open record/open meetings laws, setting rules on public access of information, generate efficient outcomes, but in general are harmful to the buyer. Similarly, the FTC's cooling-off rule sets long expiries by giving the buyer three days to cancel a contract, which generates efficient outcomes when goods are substitutes because of suppliers' Bertrand pricing, but reduces efficiency when goods are complements since long expiries make coordination harder to sustain.</p> / Dissertation

This dissertation is a collection of essays on intellectual property rights and optimal product selection when innovation occurs sequentially. One of the highlights of this dissertation has been to show the possibility of full rent extraction by the patent holder when uncertainty in litigation is taken into consideration. The result of the theoretical model has practical policy implication regarding the design of an optimal patent system. The other highlight of this dissertation is to show the coexistence of maximal and minimal product differentiation in a sequentially growing market. This result sheds light on the simulation of a multi-dimensional product space. Brief Summaries of Chapters: Chapter 1 presents a survey of the historical, legal, and economic aspects of patents. The emphasis in this survey is to recognize the crucial elements in the current patent law practice and to initiate research projects thereof. Chapter 2 considers a model of sequential innovation in which patent infringement occurs and the outcome of litigation is uncertain. By recognizing the "diminishing returns to litigation" exhibited in the winning probability distribution function for the plaintiff, it is shown that a basic researcher holding a patent is able to extract all the profit facilitated by the basic innovation. More intriguingly, under rather general circumstances, broader patent breadth may diminish the patent holder's incentive to innovate. Chapter 3 extends the previous model to include a rule on the reasonable royalty to determine the damage award. In addition to the full rent extraction results, the extended model further reveals that the second innovator has incentive to "invent around" with close imitation or "invent enough" with a much improved product. Comparative statics with respect to parameters of litigation cost and granted patent breadth are performed. Among other things, it is demonstrated that an increase in patent breadth, and an increase of litigation costs may neutralize each other. Chapter 4 analyzes a model of two-dimensional product differentiation in which sequential entry occurs and the potential entrant outperforms the incumbent in innovating a new dimension. For a three-stage entry-variety-price duopoly, a unique subgame-perfect equilibrium is obtained and fully characterized. Most importantly, the entrant will completely utilize its capacity to innovate and achieve the principle of maximum differentiation with respect to the innovated variety. However, it is shown that with a sequentially growing product space, firms will not choose extreme opposite positions in all dimensions in order to soften price competition; the principle of minimum differentiation persists with respect to the traditional variety. / Ph. D.

1 ABSTRACT SPECIFIC OF PATENT LAW IN PHARMACEUTICAL INDUSTRY This thesis scopes on particularities of patent law with regard to pharmaceuticals. It describes the basics of patent law while focusing mainly on international treaties, in particular on systems established by EPC and TRIPS. The patent system in USA and in the Czech Republic is also noted. This thesis is divided into seven chapters. In the first chapter named sources of law international institutions, treaties and situation in European union, USA and Czech Republic are described here. This chapter also deals with basic legal instruments such as patent, corporate invention or utility model. The next chapter is focused on individual conditions that need to be met in order to grant a certain patent - the most basic are novelty, inventive step and industrial applicability. The following chapter deals with problems associated with costly development of new drugs and the need of companies to get the longest possible protection for their inventions. A special chapter addresses exceptions to the stiff patent regulation. Described in the next chapter is the compulsory license, a legal instrument not very particular in the Czech Republic but relevant in some developing countries used in order to secure better availability of drugs to society. Other...

This thesis presents three papers within the field of dynamic macroeconomics. The first paper, entitled “Medium-frequency cycles and the remarkable near trend-stationarity of output”, presents a dynamic stochastic general equilibrium model with endogenous growth, capable of reconciling the observed large medium-frequency fluctuations in output, with its long run (near) trend-stationarity. This requires a model in which standard business cycle shocks lead to highly persistent movements around trend, without significantly altering the trend itself. The robustness of the trend also requires that scale effects are eliminated both in the long and short runs. In an estimated version of the model, a financial-type shock to the stock of ideas emerges as the key driver of the medium frequency cycle. The second paper, entitled “Learning from learners”, is an intervention into two long running debates: the first, on whether learnability may be used to rule out explosive paths for inflation in New Keynesian models, and the second, into whether Taylor rule parameters may be identified from observing the data. We find that in an economy populated with traditional macroeconomic learners, Taylor rule parameters can always be identified by sophisticated econometric techniques. Furthermore, when all agents in the economy use such sophisticated techniques, stationary sunspot solutions are readily learnable, and there is no guarantee of convergence to a stationary solution even in the “determinate” case. This implies that learnability cannot be used for equilibrium selection. Finally, in the third paper, “Efficient simulation of DSGE models with inequality constraints” (joint with Michael Paetz), we present a new algorithm for the simulation of models subject to inequality constraints, such as the zero lower bound on nominal interest rates. Our algorithm is shown to deliver higher accuracy than all other non-global algorithms, and leading speed. We go on to provide a number of applications of our algorithm.

This Diploma thesis, called "Comparison of patent law in the EU countries", deals with legislation of invention patents and their protection in selected countries such as Germany and the Czech Republic. Within Europe there is an attempt to harmonize the legislation in the field of intellectual property rights in all member countries and to create a unified legal system. A patent is the most important object in protection of industrial property. The secondary objective of this thesis is focused on the identification of the re-sponsible authorities and to determine the financial and time requirements for obtaining a patent. Next major objective is the evaluation of the use of the patent protection within the Czech and German universities, research organizations and private companies and then their transfer of technologies. The practical part contains the analysis of both selected countries from the per-spective of patent law, valid legislation, the responsible institutions and patent statistics for the last ten years. Additional chapter discusses the results of research and development in the university environment at three universities in the Czech Republic and Germany. The analysis is focused in particular on the procedure of obtaining a patent, then also the influence of the local authorities. The comparison of these two countries has revealed some certain similarities, but also striking differences between them. The Czech Republic is currently also slowly dis-covering the benefits of patent protection, but the results can be evaluated only after some time interval.