New Horizons in International Business series
Edited by Daniel R. Cahoy and Lynda J. Oswald
As one of the world’s most important markets, the United States is a critical space for developing new products and services. Firms that innovate require legal protection to ensure that they capture a return on their investment. In the context of new and useful articles and methods, that protection is largely provided by the US patent system. Intuitively, one may conclude that having a well-functioning patent system in America is essential for a prosperous business environment in the US. In fact, the system has been cited as an important tool for economic growth and jobs creation (Rai, Graham & Doms, 2010). The substantial patenting activity by non-US companies means that the US patent system benefits the global economy as well. Any modern firm seeking a competitive advantage must therefore understand the nature and functioning of the patent system. First and foremost, patents provide a period of exclusivity for maximizing profits. Additionally, patents can confer a myriad of ancillary advantages for a firm, such as acting as a signaling device or providing a vehicle for accessing competitor technology through licensing. For competitors and society, patents serve as a key conduit of information that fuels broader innovation by disclosing a fully enabled invention even before it is in the public domain. When firms fall on hard times, investors often rest their hopes on patents—often as an important source of remaining value (Mattioli, Spector & Jones, 2012).