Most if not negligible, role as a

Most patent offices in OECD countries experienced a surge in
patent applications in the past two decades, with the largest contribution to
growth being made by new technologies (ICT, biotechnology) and to some extent
originating in economies which have recently gained a significant position in
the international technological landscape, such as Korea and Chinese Taipei
(OECD, 2003).

Empirical evidence tends to
support the ffectiveness of patents in encouraging
innovation, with a series of surveys conducted in the United States, Japan,
and Europe in the mid-1980s and 1990s, they responded patents as extremely
important in protecting their competitive advantages in a few countries,
notably biotechnology, drugs, chemicals, machinery and computers. Companies in
other industries reported that patents play a secondary, if not negligible,
role as a means of protection for their inventions, as they tend to rely more
on alternative means such as secrecy, market lead, advance on the learning
curve, technological complexity and control of complementary assets (Levin,
Klevorick, Nelson and Winter, 1987; Cohen, Nelson and Walsh, 2000).

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However, patent protection may
also hamper further innovation, especially when it limits access to essential
knowledge, as may be the case in emerging technological areas when innovation
has a marked cumulative character and patents protect foundational inventions.
In this context, too broad a protection on basic inventions can discourage
follow-on inventors if the holder of a patent for an essential technology
refuses access to others under reasonable conditions. This concern has often
been raised for new technologies, most recently for genetic inventions
(Bar-Shalom and Cook-Deegan, 2002; Nuffield Council on Bioethics, 2002; OECD,
2003a) and software (Bessen and Maskin, 2000; Bessen and Hunt, 2003).

Nevertheless, patents can also
have a positive impact on competition when they enhance market entry and firm
creation. Not only is there evidence of small companies being able to assert
their right in front of larger ones thanks to their patent portfolio, but
patents may also be a decisive condition for entrepreneurs to obtain funds from
venture capitalists (Gans, Hsu and Stern, 2002).

Below data will compare total factor productivity to trend
of patent and utility model application. My hypothesis is that if the trend of
TFP has positive relationship with patent application and a negative
relationship with utility model application. I expect to see a certain point
which a country reaches a threshold that drastically changes those two type of
IP application.