Patents
have long been recognized as a rich data source for the study of innovation and
technological change. Patents are temporary legal monopoly rights granted to
inventors for commercial use of new inventions. In other words, patent rights
have the right to exclude others for a period defined by the disclosure of
innovation.
Actually,
there are many advantages in using patent data. Each patent contains very
detailed information about innovation. The patent is very extensive in terms of
technologies, assignees, and geography. Of course, there are limits. This is
because not all innovations are patented. Because it’s not like that all inventions
meet the patentability criteria, inventors often use secrets or other
appropriate approaches to protect their rights to technology.
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The
limitation of the use of patent data in the existing economic research was that
it depended only on the number of patents. In terms of the value of innovation,
the number of patents is a limited indicator. Subsequent studies start using
registration data or patent citations as an indicator to tackle the
heterogeneity.
The
first page of the patent contains detailed information about the invention, the
inventor, the assignee and the technological antecedents of the invention. In
particular, citations performs an important legal function because it limits
the scope of the property rights granted by the patent. For example, if patent
B cites patent A, patent A becomes the holder of existing knowledge that patent
B cannot claim. Applicants are legally obligated to disclose their prior art
knowledge, but the decision regarding which citations to include ultimately
rests with the patent examiner.
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| 🔺 wipsglobal.com < patent citations analysis > |
Citations
identifies not only technological but also economically important information.
The majority of patented innovations are R&D performances by profit-seeking
organizations. If a company invests in innovations for published patents, it
means that the cited patents are economically valuable. Moreover, as citations
continue over the long term, technical possibilities and uncertainties about
the commercial value of innovation can be dissipated. In other words, if the
cited patent is observed continuously years after the grant of the cited
patent, the latter can be proven to be really valuable.
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| 🔺 Market Value of Patent Citations (2003) < Market Valuation of Self-citations > |
There’re
studies that attempted to verify patent citations as indicators of economic
impact or value. Trajtenberg (1990) linked the flow of patents in tomography
(CT) scanners, one of the major innovation in medical technology, to the
estimated social surplus due to improvements in this technology.
The
number of patents was not correlated with the estimated surplus, while the
number of cited weighted patents was found to be closely related to it. This is
the first result showing that citations effectively conveys information about
the value of innovation.
In
a recent study by Lanjouw and Schankerman (2003), an index called citation was
used along with other indicators such as the number of claims and the number of
countries as an indicator of the quality of patents. They found that by using
multiple indicators, there is considerable power in predicting which patents
will be renewed or which patents will be involved in litigation.
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Meanwhile,
Harhoff et al. (1999) asked German holders of U.S. patents (also filed in
Germany) to estimate the price of patent sales three years after filing. They
suggested that the estimated value is related to subsequent citations, that the
most cited patents are very important, and that a single citation has an
average value of about $ 1 million. Similar results were reported when Giummo
(2003) investigated royalties received by inventors / patent holders from nine
major German companies under the German Employee Compensation Act.
H.Shane
(1993) found that the patent cited were more predictive in a survey of
semiconductor company patents between 1977 and 1990. Cited patents are more
closely related to R&D than just a number of patents, which means that
companies are putting more effort into patent innovation to generate more
citations.
In
this way, patent citations are used as a key indicator for evaluating
intangible assets in that it provides important information necessary to judge
a company's technological innovation and market value.
* Posted excerpts from Market value and patent
citations (2003).
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