The Role of Intellectual Property Rights in Information and Communication Technologies

Author: 
C Niranjan Rao
Description: 
Working Paper No. 61 September 2004
JEL codes: 
Abstract: 
The paper starts by recapitulating the basic arguments provided by economic theory to explain the existence of the patent system. The paper then concentrates on the three important ICT industries viz., telecommunication equipment, computer hardware and semiconductor industries. The issues covered in the discussion on these industries are the technological characteristics; market structure and technology transfer experiences of selected developing countries. Even though there are some differences in these industries, what come out clearly are some similarities. These similarities pertain to concentration by firm as well as country; rapid technological changes; existence of scale economies; rising minimum efficient levels of production; entry barriers to the industries both financial and technological etc. Bresnahan, Stern and Trajtenbert [1997] show that in the computer PC market brand name and being on technological frontier help the firm in appropriating inventions. Taylor and Silberston [1973] observe that in electronics while patents by themselves are not important method of appropriation, it encourages firms to accumulate patents so that they can have an advantage in cross-licensing agreements. This finding was reiterated by Hall and Ham [1999] for semiconductor industry. They name this phenomenon patent portfolio race. The paper briefly touches upon the issues pertaining to Internet and the problems it raises for copyright; protection of computer software and the discussion on a sui generis protection for databases. The paper concludes that the role of IPRs in ICT seems to be marginal and as prices are falling it does not seem to be attracting negative attention.