How to Count Patents and Value Intellectual Property: The Uses of Patent Renewal and Application Data

Patent counts are very imperfect measures of innovative output. This paper discusses how additional data--the number of years a patent is renewed and the number of countries in which protection for the same invention is sought--can be used to improve on counts in studies that require a measure of th...

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Bibliographic Details
Published in:The Journal of industrial economics 1998-12, Vol.46 (4), p.405-432
Main Authors: Lanjouw, Jean O., Pakes, Ariel, Putnam, Jonathan
Format: Article
Language:English
Subjects:
Applications
Economic models
Economic value
Fees
Industrial economics
Information economics
Innovations
Intellectual property
Inventions
Manycountries
Parametric models
Patent applications
Patent law
Publishing industry
Renewals
Studies
Technological innovation
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Summary:Patent counts are very imperfect measures of innovative output. This paper discusses how additional data--the number of years a patent is renewed and the number of countries in which protection for the same invention is sought--can be used to improve on counts in studies that require a measure of the extent of innovation. Simple weighting schemes are proposed, which may remove half of the noise in patent counts as a measure of innovative output. We describe models of the patent application and renewal processes whose parameter estimates can be used to assess the value of the proprietary rights created by the patent laws. We illustrate their use with estimates of how the value of patent protection would vary under alternative legal rules and renewal fees and with estimates of the international flows of returns from the patent system. Recent progress in the development of databases has increased the potential for this type of analysis.
ISSN:0022-1821
1467-6451
DOI:10.1111/1467-6451.00081