Richard C. Levin, Alvin K. Klevorick, Richard R. Nelson, and Sidney G. Winter examine the effectiveness of patents in appropriating returns from industrial research and development. Firms need to be able to appropriate returns from R&D to have the incentive to invest in it. However, competition can lead to imitation and improvement of innovations, which benefits consumers. Patent law aims to balance these two aspects by granting temporary monopolies in exchange for public disclosure. However, in practice, patents do not always work as intended. Appropriability is not perfect, and public disclosure does not always ensure widespread diffusion of benefits. Other methods, such as lead time and learning curve advantages, can also be effective in appropriating returns. The paper discusses the results of a survey of over 650 R&D executives across more than 100 manufacturing industries. The data, derived from informed opinions rather than quantitative measures, reveal significant interindustry variations in the effectiveness of patents and other means of appropriation. The findings suggest that patents are generally less effective in protecting process innovations than product innovations. The data also indicate that the effectiveness of patents varies across industries, with some industries relying more on other mechanisms for appropriation. The paper highlights the importance of understanding these variations for better empirical understanding of technological change and more informed public policy discussions. The survey also reveals that the effectiveness of patents is influenced by factors such as the ease of imitation, the nature of the technology, and the industry's technological environment. The paper concludes that while patents can be effective in certain industries, they are not universally effective, and other mechanisms may be more appropriate in others. The findings also suggest that the effectiveness of patents is influenced by the industry's level of technological development and the ease of imitation. The paper emphasizes the need for further research to better understand the conditions under which patents are effective and to inform policy decisions on intellectual property protection.Richard C. Levin, Alvin K. Klevorick, Richard R. Nelson, and Sidney G. Winter examine the effectiveness of patents in appropriating returns from industrial research and development. Firms need to be able to appropriate returns from R&D to have the incentive to invest in it. However, competition can lead to imitation and improvement of innovations, which benefits consumers. Patent law aims to balance these two aspects by granting temporary monopolies in exchange for public disclosure. However, in practice, patents do not always work as intended. Appropriability is not perfect, and public disclosure does not always ensure widespread diffusion of benefits. Other methods, such as lead time and learning curve advantages, can also be effective in appropriating returns. The paper discusses the results of a survey of over 650 R&D executives across more than 100 manufacturing industries. The data, derived from informed opinions rather than quantitative measures, reveal significant interindustry variations in the effectiveness of patents and other means of appropriation. The findings suggest that patents are generally less effective in protecting process innovations than product innovations. The data also indicate that the effectiveness of patents varies across industries, with some industries relying more on other mechanisms for appropriation. The paper highlights the importance of understanding these variations for better empirical understanding of technological change and more informed public policy discussions. The survey also reveals that the effectiveness of patents is influenced by factors such as the ease of imitation, the nature of the technology, and the industry's technological environment. The paper concludes that while patents can be effective in certain industries, they are not universally effective, and other mechanisms may be more appropriate in others. The findings also suggest that the effectiveness of patents is influenced by the industry's level of technological development and the ease of imitation. The paper emphasizes the need for further research to better understand the conditions under which patents are effective and to inform policy decisions on intellectual property protection.