Do Stronger Patents Induce More Innovation?

Does an expansion of patent scope induce more innovative effort by firms? We examine responses to the Japanese patent reforms of 1988. Interviews with practitioners and professional documents for patent agents suggest the reforms significantly expanded the scope of patent rights. However, econometric analysis using both Japanese and U.S. patent data on 307 Japanese firms finds no evidence of an increase in either R&D spending or innovative output which could be plausibly attributed to patent reform.