This article explores new data on the transfer and renewal of U.S. patents and interprets this new evidence using a model of patent transfers and renewal. We find that the proportion of transferred patents is large and differs across technology fields and especially type of patentees. We also find that the probability of a patent being traded depends on a number of factors --the age of the patent, the number of citations received by a given age, the patent generality, and whether the patent has been previously traded or not. These findings are consistent with the predictions of a model of patent transfers and renewals.
This paper studies the effect of business partners on the commercialization of invention-based ventures, and it assesses the relative importance of partners' human and social capital on commercialization outcomes. Projects run by partnerships were five times more likely to reach commercialization, and they had mean revenues approximately ten times greater than projects run by solo-entrepreneurs. These gross differences may be due both to business partners' value added and to selection. After controlling for selection effects and observed/unobserved heterogeneity, our smallest estimate of partner value added approximately doubles the probability of commercialization and increases expected revenues by 29% at the sample mean.
The "market for innovation" -- the sale and licensing of patents -- is an often discussed source of incentives to invest in R&D. This article presents and estimates a model of the transfer and renewal of patents that, under some assumptions, allows us to quantify the gains resulting from the transfer of patents in the market for innovation. The gains from trade measure the benefits of reallocating the ownership of a patent from the original inventor to a new owner for whom the patent has a higher value. In addition, we study the effect that lowering the costs of technology transfer has on the proportion of patents traded and the gains from trade.
We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply that patent transactions should increase litigation risk. We identify a new source of gains from trade, comparative advantage in patent enforcement, and show that transactions driven by this motive should reduce litigation. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly effect patent transactions, and that reallocation of patent rights reduces litigation risk, on average. The impact of trade on litigation is heterogeneous, however. Patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient. We also show that the impact of trade on litigation depends on characteristics of the transactions.
This paper studies the patent trading flows of small and large firms. We find that small firms disproportionately sell and acquire more patents than the large firms, especially patents initially granted to small firms. This evidence is not consistent with some of the predictions of the theory of the division of innovative labor between small and large firms. Motivated by this puzzle, we propose another determinant of patent transactions: economies of scale in the reallocation of innovations. Small firms can disproportionately sell and acquire more patents than large firms if smaller size entails inferior ability to reallocate innovations within the firm to the best productive use. The remaining of the paper provides evidence supporting this view and a simple model formalizing it. We show that the patents with the lowest fit with the patentee are the most likely to be sold, and that the patents than changed ownership are more likely to be renewed. We also show that the traded patents with the highest predicted likelihood of being acquired by small firms are also those with a higher proportion of patent citations made to small firms, suggesting that the patent trading flows also depend on technology linkages between sellers and potential buyers. Finally, we find that among the traded patents the large firms acquire the ones with the highest quality. The results point out that the market for innovation reallocates patents efficiently (at least in some limited way), and it will likely be an important source of incentives to invest in R&D, especially for small firms being typically at a disadvantage to match their newly created innovations with a productive use.
We propose a direct measure of technological change based on the transfer of the ownership of patents that are recorded at the United States Patent and Trademark Office (USPTO). The new indicator addresses two potential problems that previous patent statistics have had in the analysis of the short-run effects of technological change. First, while there might be long delays between the patenting of an invention and its use or commercialization, the date of the transfer decision is directly linked to its usefulness and demand through the market for patents. Second, while the use of patent counts has been critized because the economic significance of many individual patents is very low and variable, traded patents are both highly cited and less likely to be allowed to expire than the not previously traded ones. Next, we assess the relationship of the new indicator with changes in real GDP, total factor productivity, and R&D expenditures.