Working Paper, 2008
Novelty value is a requirement for a patentable innovation but it has been given relatively little attention.
This is a theoretical work. It should be viewed as a stepping stone to more refined models, and the authors would be reluctant to attribute too much policy relevance at this stage. Nevertheless, they feel their main points do have some policy relevance to those setting patent novelty requirements.
This paper demonstrates that all innovations should not be patentable.
For patented innovations, it is optimal to have a nonzero novelty requirement.
The equilibrium investment in R&D is an inverse U-shaped function of the novelty requirement.