Economic proof of ‘strategic’ vs innovative patents


“Using this data we find strong evidence that the standard approach to valuing innovation is
imperfect. Indeed, the relationship between lifetime forward citations and patent value is not only non-linear, it is not even monotonic. Figure 1 displays this relationship, computed from tens of thousands of observations.6 There is still an overall positive correlation between citations and value, which has been found in prior work, but it comes primarily from lower value patents, and the full pattern is more complex. This suggests that patents may not have a purely productive role in technological progress, an assumption that most prior models have made. The non-monotonic relationship could be evidence of the use of patents for strategic purposes, an idea that has been much discussed in recent years.

As the number of patents granted has increased, technological progress has led to devices that implicate thousands of separate patents. Some have argued that we have arrived at a point where the patent system is actually detrimental to innovation (Bessen and Meurer(2008), Boldrin and Levine (2012)).”

http://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1497&context=faculty_scholarship
National Bureau of Economic Research, 2013

Explanation of ‘inverted-U trend’ observed: end of p27, beginning of p28

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