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Citation Frequency and the Value of Patented Innovation

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Author Info
Dietmar Harhoff
Francis Narin
Frederic M. Scherer
Katrin Vopel

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Abstract

Through a survey, economic value estimates were obtained on 962 inventions made in the United States and Germany and on which German patent renewal fees were paid to full-term expiration in 1995. A search of subsequent U.S. and German patents yielded a count of citations to those patents. Patents renewed to full term were significantly more valuable than patents allowed to expire before their full term. The higher an invention's economic value estimate was, the more the relevant patent was subsequently cited. results from two wide-ranging surveys, one in Germany and one in the United States, support Trajtenberg's conclusion that patents with greater economic value are more heavily cited in subsequent patents. Our evidence suggests at least a two-stage escalation of economic values and citation counts. First, patents that are renewed to full term expiration in environments such as Germany with highly progressive annual maintenance fees are more valuable and more highly cited than run-of-the-mill patents allowed to expire before running to full term. Second, within the relatively exclusive cohort of fullterm patents, citation frequency rises with economic value, although with considerable noise in the relationship. The most cited patents turn out to be very valuable indeed, with a single U.S. citation implying on average more than $1 million of economic value. These findings provide new support for research seeking to overcome the limitations of simple patent counts as a measure of innovative contribution by acquiring data on citation frequencies and the number of nations in which patent protection is sought.

ZUSAMMENFASSUNG - (Zitationenzahl und der Wert der Patent-Innovation)
Durch eine Unternehmensbefragung wurde der Wert von 962 Patenten von US-amerikanischen und deutschen Anmeldern ermittelt, die den Patentschutz durch Zahlung der Verlängerungsgebühren von 1977 bis 1995 in Deutschland aufrechterhalten hatten. Außerdem wurde für diese Patente die Zahl der Zitationen (Bezugnahmen in späteren Patenten) ermittelt. Die bis zur gesetzlichen Laufzeit aufrechterhaltenen Patente wiesen eine signifikant höhere Zahl von Zitationen auf als Patente, die nicht verlängert worden waren. Zwischen der Zahl der Zitationen und dem Wert eines Patentes gibt es einen statistisch signifikanten Zusammenhang, der in dieser Studie näher beschrieben wird.

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Publisher Info
Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 97-26.

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Length: 16 pages
Date of creation: Nov 1997
Date of revision:
Publication status: Published in the Review of Economics and Statistics, Vol. 81(3), August 1999, pp. 511-515.
Handle: RePEc:wzb:wzebiv:fsiv97-26

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Related research
Keywords: innovation; patent; citation; count data model;

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References listed on IDEAS
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  1. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Christine Greenhalgh & Padraig Dixon, 2002. "The Economics of Intellectual Property: A Review to Identify Themes for Future Research," Economics Series Working Papers 135, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  2. Harhoff, Dietmar & Hoisl, Karin, 2006. "Everything you Always Wanted to Know About Inventors (But Never Asked): Evidence from the PatVal-EU Survey," Discussion Papers in Business Administration 1261, University of Munich, Munich School of Management. [Downloadable!]
    Other versions:
  3. Tuomo Nikulainen & Raine Hermans & Martti Kulvik, 2006. "Patent citations indicating present value of the biotechnology business," Discussion Papers 1048, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
  4. Stefan Wagner, 2004. "Business Method Patents in Europe and their Strategic Use – Evidence from Franking Device Manufacturers," Law and Economics 0410003, EconWPA. [Downloadable!]
    Other versions:
  5. Michel, Julie, 2007. "The effects of FDI in R&D on home countries, the case of Switzerland," MPRA Paper 6400, University Library of Munich, Germany. [Downloadable!]
  6. Eleftherios Sapsalis & Bruno Van Pottelsberghe & Ran Navon, 2006. "Academic Patenting vs. Industry Patenting: An in-depth analysis of what determines patent value," Working Papers CEB 05-008.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
  7. Eleftherios Sapsalis & Bruno Van Pottelsberghe, 2005. "The institutional sources of knowledge and the value of academic patents," Working Papers CEB 04-003.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
    Other versions:
  8. Reitzig, Markus & Ramb, Fred, 2004. "Who do you trust while bubbles grow and blow? : A comparative analysis of the explanatory power of accounting and patent information for the market values of German firms," Discussion Paper Series 1: Economic Studies 2004,17, Deutsche Bundesbank, Research Centre. [Downloadable!]
  9. C. Gay & C. Le Bas, 2005. "Uses without too many abuses of patent citations or the simple economics of patent citations as a measure of value and flows of knowledge," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 14(5), pages 333-338, July. [Downloadable!] (restricted)
  10. Schneider, Cédric & Hussinger, Katrin & Czarnitzki, Dirk, 2008. "Commercializing Academic Research: The Quality of Faculty Patenting," ZEW Discussion Papers 08-069, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  11. Ulrich Kaiser & Andrea Szczesny, 2000. "Einfache oekonomische Verfahren fuer die Kreditrisikomessung," CoFE Discussion Paper 00-28, Center of Finance and Econometrics, University of Konstanz. [Downloadable!]
  12. Myriam Mariani & Marzia Romanelli, 2006. ""Stacking" or "Picking" Patents? The Inventors' Choice Between Quantity and Quality," LEM Papers Series 2006/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  13. Bronwyn H. Hall, 1999. "Innovation and Market Value," NBER Working Papers 6984, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Ulrich Kaiser & Andrea Szczesny, 2000. "Einfache ökonometrische Verfahren für die Kreditrisikomessung: Verweildauermodelle," Working Paper Series: Finance and Accounting 62, Department of Finance, Goethe University Frankfurt am Main. [Downloadable!]
  15. Schneider, Cédric, 2007. "The Outcome of Patent Applications - Does Experience Matter?," MPRA Paper 3359, University Library of Munich, Germany. [Downloadable!]
  16. Svensson, Roger, 2008. "Renewal of Patents and Government Financing," Working Paper Series 759, Research Institute of Industrial Economics. [Downloadable!]
  17. Tuomo Nikulainen & Mika Pajarinen & Christopher Palmberg, 2005. "Patents and Technological Change - A Review with Focus on the FEPOCI Database," Discussion Papers 984, The Research Institute of the Finnish Economy. [Downloadable!]
  18. Emmanuel Duguet & Megan MacGarvie, 2005. "How well do patent citations measure flows of technology? Evidence from French innovation surveys," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 14(5), pages 375-393, July. [Downloadable!] (restricted)
    Other versions:
  19. C. Gay & C. Le Bas & P. Patel & K. Touach, 2005. "The determinants of patent citations: an empirical analysis of French and British patents in the US," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 14(5), pages 339-350, July. [Downloadable!] (restricted)
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