Working Paper | HBS Working Paper Series | 2015

Ex-ante Information Provision and Innovation: Natural Experiment of Herbal Patent Prior Art Adoption at the EPO and USPTO

by Prithwiraj Choudhury and Tarun Khanna

Abstract

We study how ex-ante information provision, in the form of codified prior art, affects innovation outcomes. Using a unique dataset of herbal patents filed on the United States Patent Office (USPTO) and European Patent Office (EPO) from 1977 to 2013, we exploit a natural experiment where the USPTO and EPO adopted a codified database of traditional herbal medicine prior art at different points in time. This database (the 'Traditional Knowledge Depository Library' or TKDL) was created by Indian state-owned R&D labs and provided the USPTO and EPO patent examiners with codified, searchable prior art on herbal formulations based on a translation of ancient Indian medicinal texts. We establish that the time lag of the USPTO adopting TKDL compared to the EPO was related to idiosyncratic differences in how the agreements were structured and negotiated, not differences in policy toward herbal patents at the USPTO and EPO. We find that the adoption of TKDL affects the level of herbal patent filing and grants. It also shifts the composition of patenting away from pure herbal formulations that are similar to prior art available in the ancient texts towards applications involving both herbs and synthetic compounds, which are more distant from the prior art and arguably less contestable. We also use unique data coded from patent image wrappers at the USPTO and validate the 'smoking gun' that prior art codification affects the search strategies of patent examiners.

Keywords: Patents; Plant-Based Agribusiness; Ethnicity; Health Care and Treatment; Pharmaceutical Industry; Agriculture and Agribusiness Industry; China; India;

Citation:

Choudhury, Prithwiraj, and Tarun Khanna. "Ex-ante Information Provision and Innovation: Natural Experiment of Herbal Patent Prior Art Adoption at the EPO and USPTO." Harvard Business School Working Paper, No. 14-079, February 2014. (Revised July 2015.)