The Economic Value of Patent Portfolios
AbstractPatent holders may choose to protect innovations with single patents or to develop portfolios of multiple, related inventions. We propose a simple decision-making model in which patent-holders may allocate resources to either expanding the number of related patents or investing in higher value of patents in the portfolio. We estimate the derived value equation using portfolio value data from an inventor survey. We find that investments in individual inventions exhibit diminishing returns, and that much of the value of a portfolio depends on adding new inventions. These effects are less pronounced in high-techology industries, when the inventions rely on external information, and when the inventor holds a doctorate. We also find higher returns to an increase of the number of inventions when firms perceive patent protection to be strong. Thus, a higher number of inventions in a portfolio may reflect both genuine creation of value or stronger appropriability via patents.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9264.
Date of creation: Jan 2013
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Find related papers by JEL classification:
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-13 (All new papers)
- NEP-IND-2013-04-13 (Industrial Organization)
- NEP-INO-2013-04-13 (Innovation)
- NEP-IPR-2013-04-13 (Intellectual Property Rights)
- NEP-TID-2013-04-13 (Technology & Industrial Dynamics)
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