Innovation strategy and the patenting behavior of firms

This paper investigates whether firms’ innovation strategies affect their patenting behavior, as measured by both the probability of having a patent portfolio and the number of active patents held. Three main dimensions of an innovation strategy are taken into account: the relative importance of basic research, applied research and development work in total R&D activities, the product or process orientation of innovation efforts, and the extent to which firms enter into collaborative R&D with other institutions. The major findings can be summarized as follows: (1) taking into account the various dimensions of an innovation strategy turns out to approximate the patenting behavior of firms better than the traditional Schumpeterian hypotheses related to firm size and market power; (2) there is a positive relationship between the patent portfolio of firms and an outward-oriented innovation strategy characterized by R&D partnerships with external organizations - scientific institutions and competitors in particular; (3) process-oriented innovators patent less than product-oriented innovators; (4) a stronger focus on basic and applied research is associated with a more active patenting behavior; (5) firms that perceive high barriers to innovation (internal, risk-related or external barriers) have smaller patent portfolios; (6) the perceived limitations of the patent system do not significantly influence the patenting behavior, suggesting that firms patent for other strategic reasons than merely protecting innovation rents.     

Unsuccessful patent application and cooperative R&;D

We show that uncertainty in patent approvals may induce the firms to do cooperative R&D. With an exogenous probability of success in patent application, we show that, if all firms apply for patents under non-cooperative R&D, the firms prefer cooperative R&D than non-cooperative R&D for moderate (high) probabilities of success in patent applications, if the cost of patenting is small (large). We also show the implications of entry of non-innovating firms and endogenous probability of success in patent applications.      

TRIPs and patenting activity: Evidence from the Indian pharmaceutical industry

This paper studies the impact of the strict patent regime on the patenting activity of Indian pharmaceutical firms and finds that patenting activity of these firms has increased after the signing of TRIPs. The study is conducted for 65 pharmaceutical firms for the period 1991 to 2004 using different parametric and semiparametric count panel data models. Results across different count data models indicate a positive and significant impact of the introduction of stronger patents on patenting activity. Further, the results show a gestation lag of 2 years between R&D spending and patent applications.     

An integrated indicator system for patent portfolios: evidence from the telecommunication manufacturing industry

Against the background of ‘patent portfolio races’ in industries such as telecommunications, this paper proposes a set of patent portfolio indicators to measure patents’ scale and diversity. This indicator system is used in a time series to analyse the patenting activity and technology strategy of the world’s top 20 firms in the telecommunication manufacturing industry, based on a large data set from United States Patent and Trade Office. In combination with composite and relative measures, we identify the firms’ comparative positions in patenting activity. The paper adds to the ongoing discussion about, and enriches the theory of, patent portfolios.     

Types of patents and driving forces behind the patent growth in China

As a developing economy, China's unprecedented patenting surge is puzzling. We study China's patent surge and its driving forces using a novel and comprehensive merged dataset on patent applications filed by Chinese firms. We find that R&D investment, FDI, and patent subsidy have different effects on different types of patents. First, R&D investment has a positive and significant impact on patenting activities for all types of patents under different model specifications. Second, the stimulating effect of foreign direct investment on patent applications is only robust for utility model patents and design patents. Third, the patent subsidy only has a positive impact on design patents. The results imply that FDI and patent subsidy may disproportionately spur low-quality patents.     

企业专利与外部融资

除保护技术输出的传统职能外,专利在企业和利益相关者沟通中也发挥着重要的信号传递职能。其中,专利在资本市场上的信号价值近年来备受关注,已有研究指出专利作为质量信号有助于企业获得投资者认可,并且专利信号效果依赖于投资者获得企业信息的多少。在此基础上,进一步讨论了投资者获得企业信息的内容对信号价值的影响。具体地,在负面信号情境下（企业过去的财务绩效差、收益波动性大、未来不确定性高）,专利的信号价值更强,而在正面信号情境专利信号效果减弱。利用来自深沪两市1 787家上市公司2000-2011年面板数据验证了以上假设,专利数量和外部融资之间存在正向关系,并且在负面信号情境下二者正向关系更强。稳健性检验进一步表明,发明专利的信号效应比非发明专利更强,而私企的专利信号效应比国企更强。     

Joint Ventures, Universities, and Success in the Advanced Technology Program

America's most innovative firms (with 40%+ of U.S. patents assigned to U.S. entities during 1988–96) participate, often repeatedly, in the Commerce Department's Advanced Technology Program (ATP). Participation significantly increases firms'innovation (patenting) while receiving ATP support versus before and after. Firms generally increase patenting by 5–30 patents per year when participating—up 4 to 25% from before participation. University participation in a project increases firm patenting. Funding amount matters for single participants (often startups with small R&D budgets) with positive impact limited to firms with large grants. For joint ventures, participation is more important than funding level. (JEL O3 , H5 , L24 )     

Does a strong patent regime discourage innovation?

Does a strengthening of the patent regime impact R&;D expenditure? For the US semiconductor industry, a strengthening of the patent regime in the 1980s was followed by a sharp increase in patenting but had almost no impact on R&;D expenditure. This paper attempts to understand this patent paradox by taking some of the industry features into account. We present a model of invention and product development in complex industries where product development involves putting together a large number of inventions and where licensing of patentable inventions is common. While a stronger patent regime leads to higher patenting in both in presence and absence of licensing, the positive relationship between patenting and R&;D is weakened in presence of licensing since licensing provides an alternative way of accessing inventions. A stronger patent regime, therefore, may only create weak incentives to increase R&;D, while strongly increasing patenting activities in such an industry.     

Using a distance measure to operationalise patent originality

We introduce a distance measure to operationalise Trajtenberg, Henderson, and Jaffe’s [1997. “University Versus Corporate Patents: A Window on the Basicness of Invention.” Economics of Innovation and New Technology 5: 19–50] originality construct (an ex-ante indicator of firms’ technological capabilities). Our measure captures (1) technological diversity, (2) technology distance from patent antecedents, and (3) degree of novelty per each patented innovation. The V-score measure uses the Derwent World Patent Index system to classify technologies hierarchically – making similarities and differences pronounced. Power is gained by using all of the technology-classification codes describing a focal patent’s claims when calculating whether its technology space was incrementally different or radical from those of its antecedent patents (and identifying whether its technology-class code combinations were commonplace at the time when the patent application was made). Our V-score’s prediction of firms’ performance is contrasted with Hall, Jaffe, and Trajtenberg’s [2001. Hall, B. H., A. B. Jaffe, and M. Trajtenberg. 2001. The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools. NBER Working Paper No. 8498] Herfindahl measure of the same originality construct. Results indicate that the distance measure of technological content produces differently signed results when evaluating patents’ performance effects or predicting a firm’s trajectory.     

Impact of patenting on firms' performance: an empirical investigation based on manufacturing firms in India

The study aims to estimate the impact of R&D expenditure and patenting on the performance of firms using productivity, profitability and Tobin's q ratio as the performance indicators. The study uses firm-level data of 489 high- and medium-technology firms during the period of 2000–2010. We employ relatively a new source of data particularly in the context of India, firm-level patent granted, that has not been explored earlier. The study finds that firms patenting result in productivity improvement of firms, whereas R&D expenditure does not. The study further finds the evidence of positive impact of patenting on financial performance of firm with significant differences between foreign and domestic firms.     

The Innovation‐R&D Nexus in an Emerging Economy: Evidence from the Indian Manufacturing Sector

While R&D is considered an important input for innovation, its relationship with the output of the innovation process continues to remain enigmatic, especially in developing countries with low levels of domestic research. Using patents and knowledge capital stock as proxies for the output and input of the innovation process, we study their nexus in the emerging economy of India using a large sample of manufacturing firms over the period 2001–2010. Using a specification that addresses the problem of ‘excess zeroes’ in count data, the firm's non‐technical knowledge stock as an additional factor of the success with which R&D transforms into patents, and a linear feedback mechanism that yields consistent estimators, we find that a one unit increase in knowledge capital likely raises expected patent count by only about 4.3% at most. Further, although patenting experience, resource access and knowledge spillovers are strongly significant in explaining patent counts, the magnitude of these effects is marginal at best. In brief, evidence for the knowledge production function is rather weak even in the context of a dynamic developing economy.     

Sources and characteristics of software patents in the European Union: Some empirical considerations

Software patenting is an increasingly important phenomenon in the European Union. Using a novel database of more than 30,000 software patents granted to both European and Non-European companies, we investigate the relevant factors explaining firm-level software patenting at the European Patent Office. We find that software patents are mainly applied for by American and Japanese firms, that they are characterised by a higher than average length of the granting procedure and that firms belonging to the software sector generally do not apply for them. Finally, results from non-linear panel data estimation reveal that patents are not deemed as useful appropriability instruments by software firms and that a “threat effect” by hardware firms is growing in importance. This last result is in line with recent developments in the literature relative to strategic patenting.     

Micro evidence on international patenting

Globalization, high growth rates in high-tech industries, growing emerging markets and harmonization of patent institutions across countries have stimulated patenting in foreign markets. We use a simple model of international patenting, where the decision to patent in a foreign country depends on country characteristics and the quality of the patented invention. With access to a detailed database on individual patents owned by small Swedish firms and inventors, we are able to estimate some of these relationships and test their validity. Our results indicate that the propensity to apply for international patent protection increases with indicators of the quality of the invention, technological rivalry and market size in the host market.     

Reverse causality in the R&D–patents relationship: an interpretation of the innovation persistence

Starting from the failure of the R&D–patents traditional relationship, when time-series and/or within-industry dimensions are included in the empirical analysis, the present work tries to contribute to the empirical literature from two directions. First, it performs a Granger causality test based on the theoretical presumption of a reverse patents→R&D link as an explanation for the failure of the traditional relationship. Second, assuming the reverse patents–R&D causality, we test and interpret the lag structure of such a relationship which shows the effective patent life that firms can expect within the two Schumpeterian patterns of innovations they belong to. In the light of the effective patent life, we offer a further explanation of innovation persistence which overturns the findings of the existing literature on persistence.     

Runner‐up Patents: Is Monopoly Inevitable?

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.     

Losing the lead: the patenting decision in the light of the disclosure requirement

Empirical findings state that the disclosure requirement might be a reason for firms to rely on secrecy rather than patents to protect their inventions. We choose a dynamic framework in which we can explicitly analyze the patenting decision reflecting the tradeoff between a positive protective effect and a negative effect due to the required disclosure of the protected invention. In spite of a patent, the inventor's rival may still enter the market with a non-infringing product. Measuring the technological lead of the inventor by a time advantage he has compared with his rival, we show that if his headstart exceeds a critical threshold, he will not patent and rather rely on secrecy.     

Business planning based on technological capabilities: Patent analysis for technology-driven roadmapping

This research responds to the needs of technology-driven business by focusing on how firms can find new business opportunities based on their technological capabilities. It proposes a technology-driven roadmapping processes that starts from capability analysis for technology planning and ends with business opportunity analysis for market planning. We suggest the use of patent data as a proxy measure of technological capability for this purpose and develop four analysis modules — Monitoring, Collaboration, Diversification, and Benchmarking — to support decision-making during the process. Various analysis techniques such as text-mining, network analysis, citation analysis and index analysis are applied to discover meaningful implications from the patent data, which are summarized in four maps — Actor-similarity map, Actor-relations map, Technology-industry map, and Technology-affinity map. For the purpose of illustration, RFID-related patents are collected and the 18 firms with the most patents used, focusing especially on the third biggest. We believe using roadmapping and patent analysis together can play complementary roles for each other. Putting roadmapping techniques together with patent analysis can increase the objectivity and reliability of technology roadmap, while using patent analysis restricted to technological information together with roadmapping techniques can ensure that a more valuable breadth of strategic information is extracted from patents.     

Green technological diversification of European ICT firms: a patent-based analysis

ABSTRACT

This paper investigates whether and how diversified firms in the Information and Communication Technology (ICT) sector innovate in green technologies and assess the potential impact of these innovations on firm performance. The analysis relies on a balanced panel dataset of European ICT firms in the period 2009–2013. The results suggest an inverted u-shaped relationship between the extent of technological diversification and the likelihood to develop green technologies. Technological diversification generally increases the likelihood of green innovations, but too high a dispersion of resources across a large variety of different technologies decreases the intensity of green innovations. The results show also that the development of green technologies is positively associated with firm performance: ICT firms involved in green patenting activity perform better than ICT firms with no green patents.     

Knowledge technological proximity: evidence from US and European patents

The purpose of this paper is to explore the correlation between the technological proximity measures in three areas: USA, Japan and the Europe. In each economic area, we use information from two international patent systems to construct the technological proximity for 240 large international firms. In particular, we select firms’ patents from United States Patent and Trademarks Office data and European Patent Office data. In order to compute the technological proximity, we follow the methodology developed by Jaffe [1986. “Technological Opportunity and Spillovers of R&D: Evidence from Firms’ Patents, Profits and Market Value.” American Economic Review 76 (5): 984–1001], where a technological vector is based on the distribution of patents of each firm across technology classes. Since the Jaffe distance assumes that spillovers only occur within the same technology class, but rules out spillovers between different classes, we develop also a distance measure which exploits the Mahalanobis norm to identify the distance between different technology classes based on the frequency that patents are taken out in different classes by the same firm. The contribution to the existing literature is to investigate the robustness of the technological proximity measure and the extent to which it may be affected by patent system features.     

Technological Activity and Employment in a Panel of UK Firms

We investigate the relationship between technological activity, proxied by R&D, patents, and trade marks, and employment for a panel of British production firms from 1987 to 1994. We modify standard derived demand for labour to include technology variables. We find employment is fostered by R&D expenditure and UK patent publications, ceteris paribus on factor costs and current sales. The employment impact of R&D is bigger in high technology sectors, but employment increase from UK patenting activity is bigger in mature technology sectors. In further analysis of persistent differences (the estimated firm fixed effects) UK trade marks and US patents are also positively associated with employment.