The Outcome of Patent Applications - Does Experience Matter?

Schneider, Cédric (2007): The Outcome of Patent Applications - Does Experience Matter?

Abstract

The aim of this paper is to study the determinants of the outcomes of patent applications (withdrawal, refusal or grant). The application process at the European Patent Office is modelled in three stages, using a Trivariate Probit model with double selectivity correction in order to test whether the applicants ?patenting history has an effect on the outcome of the current application. I investigate the behavior of the applicant after the patent office has established the "state of the art", a precondition to an invention being patentable. The main results are (i) firms with large patents portfolios act following a "trial and error" strategy, by applying for large numbers of patents and thereafter waiting for the patent office?s final decision when the expected probability of grant is high, (ii) the technological importance of a patent is a crucial determinant of a successful application grant, (iii) a withdrawal is to be regarded as an expected refusal, since applicants tend to withdraw their applications when there is evidence that the inventions cannot be considered to be novel or to involve an inventive step.

• Item Type: MPRA Paper
• Institution: CEBR, Copenhagen Business School
• Language: English
• Keywords: European Patent Office; Intellectual Property Rights
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital

References

Bennedsen, M., Nielsen, K. M., Perez-Gonzalez, F. and Wolfenzon, D. (2006) "Inside the Family Firm:The Role of Families in Succession Decisions and Performance", forthcoming in Quarterly Journal of Economics.

Caillaud, B. and Duchêne, A. (2006) "Patent O¢ ce in Innovation Policy: Nobody�s Perfect", mimeo, Paris School of Economics.

Cockburn, I., Kortum, S. and Stern, S. (2002) "Are all patent Examiners Equal? Examiners, Patent Characteristics and Litigation Outcomes" in Cohen, W. and Merrill, S. (eds.) Patents in the Knowledge-Based Economy, National Academies Press, Washington DC, 2003.

Czarnitzki, D., Hall, B. and Oriani, R. (2005) �The Market Value of Knowledge Assets in U.S. and European Firms,�in D. Bosworth and E. Webster (eds.), The Management Of Intellectual Property.

Delmar, F. and Shane, S. (2006) "Does Experience Matter? The Effect of Founding Team Experience on the Sales of Newly Founded Firms", Strategic Organization, 4(3), 215-247.

Dixit, A. (1989) "Entry and Exit Decision under Uncertainty", Journal of Political Economy, 97 (3), 620-638.

Gambardella, A., Harhoff, D. and Verspagen, B. (2006) "The Value of Patents", mimeo.

Gourieroux, C. and Monfort, A. (1996). "Simulation-Based Econometric Methods", Oxford: Oxford University Press.

Guellec D. and van Pottelsberghe, B. (2000) "Applications, grants and the value of patents", Economic Letters, 69 (1), pp. 109-114.

Guellec and Van Pottelsberghe (2002) "The Geographical and Technological Specicities of Patenting Strategies" Economics of Innovation and New Technology.

Hall, B. H. (1990), �The Manufacturing Sector Master File: 1959-1987.� NBER Working Paper No. 3366

Hall, B. H. and Harhoff, D. (2004) "Post-Grant Reviews in the US Patent System -Design Choices and Expected Impact" Berkeley Technology Law Journal, 19 (1).

Hall, B. H. and Ziedonis, R. H. (2001), "The Determinants of Patenting in the US Semiconductor Industry, 1980-1994", Rand Journal of Economics, 32 (), 101-128.

Hall, B. H. and Ziedonis, R. H. (2007), "An Empirical Analysis of Patent Litigation in the Semiconductor Industry", Working Paper, UC Berkeley. 31

Harhoff, D. and Reitzig (2004) "Determinants of Opposition against EPO Patent Grants - the Case of Biotechnology and Pharmaceuticals" International Journal of Industrial Organization, 22(4) 443-480

Harhoff, D. and Wagner, S. (2005), "Modelling the Duration of Patent Examination at the European Patent Office" CEPR Discussion Paper No. 5283.

Harhoff, D., Hoisl, K. & Webb, C. (2005), "European Patent Citations �How to count and how to interpret them", Unpublished Discussion paper, University of Munich.

Harhoff, D., Scherer, F. & Vopel, K. (2003), "Citations, Family Size, Opposition and the of Value of Patent Rights", Research Policy 32(8), 1343�1363.

Kaiser, U. and Kongsted, H. C. (2007) "True versus Spurious State Dependence in Firm Performance: The Case of West-German Exports" Empirical Economics, forthcoming.

Kaiser, U. & Schneider, C. (2004), The CEBR Matched Patent/Patent Applicant/Employee Data Base: Part 1 �Patent Data and Applicant data, miméo, Centre for Economic and Business Research.

Kaiser, U., Licht, G., Rønde, T. & Schneider, C. (2005) "Patent Activity in Denmark" Discussion Paper No 2005-09, Centre for Economic and Business Research.

Langinier, C. and Marcoul, P. (2007) "Patents, Search of Prior Art and Revelation of Information", Working Paper, Iowa State University.

Lanjouw, J. & Schankerman, M. (2004), "Patent Quality and Research Productivity: Measuring Innovation with Multiple Indicators", The Economic Journal, 114(), 441-465.

Lanjouw, J. & Schankerman, M. (2004), "Protecting Intellectual Property Rights: Are Small Firms Handicapped?" The Journal of Law and Economics, XLVII (1), 45-74.

Lanjouw, J. Pakes, A. and Putnam, J.(1998) "How to Value Patents and Intellectual Property: Uses of patent Renewals and Application Data" The Journal of Industrial Economics, XLVI (4), 405-433.

Lemley, M. A. (2001) "Rational Ignorance at the Patent Office", Northwestern University Law Review, 95 (4), 21-56.

Lerner, J.(1994) "The Importance of Patent Scope: an Empirical Analysis" Rand Journal of Economics, 25 (2), 319-333.

Lerner, J.(2007) "Trolls on State Street? An Analysis of Financial Litigation, 1976-2005", Working paper, Harvard Business School.

Martinez, C. and Guellec, D. (2003) "Overview of Recent Trends in Patent Regimes in United States, Japan and Europe", OECD, DSTI/STP/TIP(2003)6.

OECD (2004), "Compendium of Patent Statistics", OECD.

Regibeau, P. and Rockett, K. (2007), Are More Important Patents Approved more Slowly and Should They?, CEPR Discussion Paper No 6178

Peters, B. (2007) "Persistence of Innovation: Stylized Facts and Panel Data Evidence" Journal of Technology Transfer, forthcoming.

Popp, D., Juhl, T. and Johnson, D. (2003) "Time in Purgatory: Determinants of the Grant Lag for US Patent Applications", Topics in Economic Analysis & Policy, 4(1)

Roberts, M. J. and Tybout, J. R. (1997), "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs", The American Economic Review, 87 (4), 545-564.

Train, K. (2003), "Discrete Choice Methods with Simulations", Cambridge University Press.

Van de Ven, W.P.M.M., and Van Praag, B.M.S. (1981), "The Demand For Deductibles in Private Health Insurance, a Probit Model with Sample Selection, Journal of Econometrics, 17(), 229-252.

Van Dijk, T. and Duysters, G. (1998), "Passing the European Patent Office: Evidence from the Data-Processing Industry", Research Policy, 27, 937-946.

Webb, C., Dernis, H., Harhoff, D. and Hoisl, K. (2005), "Analyzing European and International Patent Citations: A Set of EPO Patent Database Building Blocks", OECD Science, Technology and Industry Working Papers, 2005/9, OECD Publishing.