Do patent pledges accelerate innovation?

This paper estimates the effect of patent pledges, commitments made voluntarily by patent holders to limit the enforcement of their patents, on follow-on inventions. Patent pledges have been gaining popularity in recent years thanks to the highly visible pledges of companies such as Google and Tesla. Extant literature discusses the legal and strategic implications of patent pledges, but we know very little about the societal aspects of such pledges. The empirical analysis exploits original data on over 1200 patents pledged from across technological fields between 2005 and 2017. We implement recent advances in conditional difference-in-differences estimators for staggered, dynamic event study settings to account for unobserved endogenous selection into a patent pledge. We build the matched control group of not-pledged patents using similarity measures of the full text of patent documents. The results suggest that patent pledges spur technological progress, as reflected by increased citations received by the pledged patents. The effect is particularly salient for the more open patent pledges and the higher-quality and more novel patents. The results bear implications for discussions about the role of intellectual property on technology diffusion.