Design

Does Winning a Patent Race lead to more follow-on Innovation?

Co-authored: Jeffrey Kuhn

Competition between firms to invent and patent an idea, or “patent racing,” has been much discussed in theory, but seldom analyzed empirically and never at scale. This article introduces an empirical way to identify patent races, and provides the first broad-based view of them in the real world. It reveals that patent races are common, particularly in information-technology fields. The analysis is then extended to get the causal impact of winning a patent race, using a regression-discontinuity approach. It shows that patent race winners do significantly more follow-on innovation, and the follow-on research that they do is more similar to what was covered by the patent.

Design

The Ways We’ve been Measuring Patent Scope are Wrong: How to Measure and Draw Causal Inferences with Patent Scope

Co-authored:Jeffrey Kuhn

According to surveys, the top 10% of patents are worth more than a thousand times as much as the bottom 10%. This isn’t surprising since a patent’s value derives from its ability to exclude rival products from the market, and patents vary widely in their ability to do this. At the same time as there is great variation in the value of patents that do issue, there is almost no variation between patents that are ‘just’ worth filing and those that aren’t – both are nearly worthless. This presents a challenge for innovation scholars, because we have much better tools for measuring whether or not something is patented than we do for how much scope a patent protects. Thus our empirical tools are weakest precisely where they are most important.

This paper presents an easy-to-use measure of patent scope that is grounded both in patent law and in the practices of patent attorneys. Our measure counts the number of words in the patents’ first claim. The longer the first claim, the less scope a patent has. This is because a longer claim has more details – and all those details must be met for another invention to be infringing. Hence, the more details there are in the patent, the greater are the opportunities for others to invent around it. We validate our measure by showing both that patent attorneys’ subjective assessments of scope agree with our estimates, and that the behaviour of patenters is consistent with it. Our validation exercise also allows us to examine the performance of previous measures of patent scope: the number of patent classes, the number of citations made by future patents, and the number of claims in a patent. We find them all to be uninformative (no useful correlation with scope) or misleading (negative correlation with scope).

To facilitate drawing causal inferences with our measure, we show how it can be used to create an instrumental variable, patent examiner Scope Toughness, which we also validate. We then demonstrate the power of this instrument by examining standard-essential patents. We show that an (exogenous) diminishment of patent scope leads to patents being much less likely to be declared standard-essential.

Design

University Licensing and the Flow of Scientific Knowledge

Co-authored: Arvids Ziedonis and David Mowery
Design

The Market Impact of Patents: Evidence from a Randomized Control Trial

Co-authored: Albina Khairullina, Chris Tucci and Donald Sull

This on-going project explores how much market protection patents provide. This is being tested in a randomized control trial, where a partner company is abandoning or maintaining patent protection based on whether that patent is in the treatment or control group. We are then analyzing market outcomes for the related products.