Exclusive patents sacrifice product competition to provide firms incentives to innovate. We
characterize an alternative mechanism whereby later inventors are allowed to share the patent
if they discover within a certain time period of the first inventor. These runner-up patents
increase social welfare under very general conditions. Furthermore, we show that the time
window during which later inventors can share the patent should become a new policy tool
at the disposal of the designer. This instrument will be used in a socially optimal mix with
the breadth and length of the patent and could allow sorting between more or less efficient
firms.
