Valuation of patents in emerging economies: a renewal model-based study of Indian patents
02 Mar 2020-Technology Analysis & Strategic Management (Informa UK Limited)-Vol. 32, Iss: 4, pp 457-473
TL;DR: It is found that a large number of patents expire at an early stage leaving few patents with high value corroborating the results of studies using European, American and Chinese data.
Abstract: This study uses patent renewal information to estimate the private value of patents. Patent value refers to the economic reward that the inventor extracts from commercialising the patented inventio...
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TL;DR: In this paper, the authors examined how patent renewal fees may be restructured to discourage low-value patents with the goal of reducing the burden on patent offices without unduly impairing innovation incentives.
Abstract: This paper examines how patent renewal fees may be restructured to discourage low-value patents with the goal of reducing the burden on patent offices without unduly impairing innovation incentives. We depart from Pakes' (1986) real-option model by moving to an approach involving binomial trees, widely used in valuing financial options. The new approach has the advantage of allowing the dynamics of the patent rent to follow a wide range of stochastic processes. The model is estimated using French data from 1970 to 2002. Policy simulations cast some doubt on the relevance of the current schedule of renewal fees. An alternative fee schedule is suggested.
59 citations
TL;DR: In this article, the authors examined the direct effect of resource divestiture on firms' innovation in the technological domain and scrutinized the influence of the rhythm of divestiture and diversity of divesting technological dimension on innovation.
14 citations
Posted Content•
TL;DR: The authors revisited the relationship between market value and innovation in the context of manufacturing firms in a developing country, using Indian data from 2001 through 2010, and found that financial markets value the R&D investment of Indian firms the same or higher than such investment is valued in developed economies like the US.
Abstract: We revisit the relationship between market value and innovation in the context of manufacturing firms in a developing country, using Indian data from 2001 through 2010. Surprisingly, we find that financial markets value the R&D investment of Indian firms the same or higher than such investment is valued in developed economies like the US. Using a proxy for the option value of R&D, we find that this accounts for a very small part of the R&D valuation (5% at most). We also find that the market value-R&D relationship does not vary significantly across industry groups, although these results are imprecise.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
6 citations
References
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TL;DR: In this paper, the impact of patent scope on firm value was examined using a sample of 535 financing rounds at 173 privately held venture-backed biotechnology firms, and it was shown that a one standard deviation increase in average patent scope is associated with a 21% increase in the firm's value.
Abstract: This article examines the impact of patent scope on firm value. I develop a proxy for patent scope based on the International Patent Classification scheme. Using a sample of 535 financing rounds at 173 privately held venture-backed biotechnology firms. I show that the breadth of patent protection significantly affects valuations. A one standard deviation increase in average patent scope is associated with a 21% increase in the firm's value. Broad patents are more valuable when substitutes in the same product class are plentiful, a finding consistent with theoretical suggestions.
1,043 citations
"Valuation of patents in emerging ec..." refers background in this paper
...Technology Scope: Lerner (1994) observes that technological breadth of patent is significantly associated with the firm’s valuation, and broad patents are more valuable when many possible substitutes in the same product class are available....
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TL;DR: In this paper, the authors examined the distribution of the values of patent rights in the United Kingdom, France, and Germany during the post-1950 period, based on the behavior of patentees with respect to payment of renewal fees on their patents.
Abstract: This paper examines the distribution of the values of patent rights in the United Kingdom, France, and Germany during the post-1950 period. These values are inferred from the behavior of patentees with respect to payment of renewal fees on their patents. A simple economic model of renewal decisions is combined with data on the proportion of patents renewed at alternative ages and the renewal fee schedules to produce estimates of the distribution (and the total) value of patent rights in these countries. Moreover, the data indicate that there have been changes in the value distribution, and we follow these changes over the period. The empirical results of particular interest concern: the total value of patent rights and the relationship between changes in it and changes in the quantity of patents, the skew in the distribution of patent values, and the rate of obsolescence on the returns to patents.
748 citations
"Valuation of patents in emerging ec..." refers background in this paper
...Schankerman and Pakes (1985) and Lanjouw, Pakes, and Putnam (1998) use data on renewal payments to estimate the private value of patents considering patent life as an indicator of its value....
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...In a more complicated model, Schankerman and Pakes (1985) allow patentee to be uncertain about the return’s sequence....
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Book•
15 Aug 1969
638 citations
"Valuation of patents in emerging ec..." refers background in this paper
...Lanjouw, Pakes, and Putnam (1998) found that the number of jurisdictions in which the patent has been sought is associated with the value of patent. Grant lag: It is defined as the time elapsed between the filing date of application and date of grant. Harhoff and Wagner (2009) and Régibeau and Rockett (2010) found an inverse relationship between the patent value and the grant lag....
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...Lanjouw, Pakes, and Putnam (1998) found that the number of jurisdictions in which the patent has been sought is associated with the value of patent....
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Posted Content•
TL;DR: In this paper, a simple renewal based weighting scheme is proposed which may remove half of the noise in patent counts as a measure of innovative output, which can be used to estimate the value of the proprietary rights created by the patent laws.
Abstract: 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 which require a measure of the extent of innovation. A simple renewal based weighting scheme is proposed which may remove half of the noise in patent counts as a measure of innovative output. The paper also illustrates how these data can be used to estimate the value of the proprietary rights created by the patent laws. The parameters estimated in this analysis can be used to answer a series of questions related to the value of patents. We illustrate 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.
614 citations
TL;DR: 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 are illustrated.
Abstract: 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.
586 citations
"Valuation of patents in emerging ec..." refers background or methods in this paper
...Lanjouw, Pakes, and Putnam (1998) found that the number of jurisdictions in which the patent has been sought is associated with the value of patent....
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...Following, that a set of studies used renewal data as a measure of patent value (Lanjouw, Pakes, and Putnam 1998; Bessen 2008; Gupeng and Xiangdong 2012)....
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...Schankerman and Pakes (1985) and Lanjouw, Pakes, and Putnam (1998) use data on renewal payments to estimate the private value of patents considering patent life as an indicator of its value....
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