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Patent Protection: Of What Value and for How Long?

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  • Jean Olson Lanjouw

Abstract

Empirical estimates of the private value of patent protection are found for four technology area - computers, textiles, combustion engines, and pharmaceuticals - using new patent data for West Germany, 1953-1988. Patentees must pay to keep their patents in force. A dynamic stochastic discrete choice model of optimal renewal decisions is developed incorporating both learning about an innovation and the market as well as the possibility of infringements. The evolution of the distribution of returns over the life of a group of patents is calculated for each technology using a minimum distance simulation estimator. Results indicate that learning is completed within 6 years, that obsolescence is rapid, and that the distributions of patent value are very skewed. Research and development (R&D) expenditures are calculated and patent protection as an implicit subsidy to investment in R&D discussed.

Suggested Citation

  • Jean Olson Lanjouw, 1993. "Patent Protection: Of What Value and for How Long?," NBER Working Papers 4475, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4475
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    Cited by:

    1. Nicolas van Zeebroeck & Bruno van Pottelsberghe de la Potterie, 2011. "Filing strategies and patent value," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(6), pages 539-561, February.
    2. Jean Lanjouw & Josh Lerner, 1998. "The Enforcement of Intellectual Property Rights: A Survey of the Empirical Literature," Annals of Economics and Statistics, GENES, issue 49-50, pages 223-246.
    3. Eleftherios Sapsalis & Bruno van Pottelsberghe de la Potterie, 2007. "The Institutional Sources Of Knowledge And The Value Of Academic Patents," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(2), pages 139-157.
    4. Nicolas van Zeebroeck, 2011. "The puzzle of patent value indicators," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(1), pages 33-62.
    5. Grönqvist, Charlotta, 2009. "Empirical studies on the private value of Finnish patents," Scientific Monographs, Bank of Finland, number 2009_041, November.
    6. Louise Keely, 2001. "Using Patents In Growth Models," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 10(6), pages 449-492.
    7. Michele Boldrin & David K. Levine, 2009. "Market Size And Intellectual Property Protection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(3), pages 855-881, August.
    8. Bruno Pottelsberghe de la Potterie & Nicolas Zeebroeck, 2008. "A brief history of space and time: The scope-year index as a patent value indicator based on families and renewals," Scientometrics, Springer;Akadémiai Kiadó, vol. 75(2), pages 319-338, May.
    9. McCalman, Phillip, 2001. "Reaping what you sow: an empirical analysis of international patent harmonization," Journal of International Economics, Elsevier, vol. 55(1), pages 161-186, October.
    10. Samuel Kortum, 1994. "A Model of Research, Patenting, and Technological Change," NBER Working Papers 4646, National Bureau of Economic Research, Inc.
    11. Nicolas van Zeebroeck, 2007. "Patents only live twice: a patent survival analysis in Europe," Working Papers CEB 07-028.RS, ULB -- Universite Libre de Bruxelles.
    12. Jean O. Lanjouw & Ariel Pakes & Jonathan Putnam, 1996. "How to Count Patents and Value Intellectual Property: Uses of Patent Renewal and Application Data," NBER Working Papers 5741, National Bureau of Economic Research, Inc.
    13. Austin, David, 2000. "Patents, Spillovers and Competition in Biotechnology," Discussion Papers dp-00-53, Resources For the Future.
    14. Jean O. Lanjouw & Mark Schankerman, 1997. "Stylized Facts of Patent Litigation: Value, Scope and Ownership," NBER Working Papers 6297, National Bureau of Economic Research, Inc.
    15. Alessandra Fogli & Raquel Fernandez, 2009. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 146-177, January.
    16. Ijaz Nabi & Manjula Luthria, 2002. "Building Competitive Firms : Incentives and Capabilities," World Bank Publications, The World Bank, number 15220, July.
    17. Jean O Lanjouw & Josh Lerner, 2004. "The Enforcement of Intellectual Property Rights: A Survey of the Literature," Levine's Working Paper Archive 122247000000000486, David K. Levine.
    18. Marc Baudry & Béatrice Dumont, 2006. "Patent Renewals as Options: Improving the Mechanism for Weeding Out Lousy Patents," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(1), pages 41-62, February.
    19. Michele Boldrin & David K. Levine, 2005. "Intellectual property and market size," Staff Report 360, Federal Reserve Bank of Minneapolis.
    20. David Popp, 2005. "They Don't Invent Them Like They Used To: An Examination of Energy Patent Citations Over Time," NBER Working Papers 11415, National Bureau of Economic Research, Inc.
    21. Michele Boldrin & David K. Levine, 2006. "Growth and Intellectual Property," NBER Working Papers 12769, National Bureau of Economic Research, Inc.
    22. Jean Olson Lanjouw, 1994. "Economic Consequences of a Changing Litigation Environment: The Case of Patents," NBER Working Papers 4835, National Bureau of Economic Research, Inc.

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