Estimating the private value of patents is important, yet challenging. By developing a method that uses stock market returns to produce a distribution of patent values (and not just an estimate of the mean of that distribution), Kogan, Papanikolaou, Seru, and Stoffman (2017) (KPSS) opened venues for new research. Researchers have used these estimates to compare average values of different types of patents. In this paper, we argue that KPSS values should not be used in their current form to compare mean values of different groups of patents, and show this to be the case in the context of research on the private returns to scientific patents. We extend the original KPSS method to allow for patents to be drawn from two distinct value distributions. Using this approach, we find that scientific patents have a higher mean value compared to non-scientific patents.
Authors
Ashish Arora, Sharon Belenzon, Elia Ferracuti, Jay Prakash Nagar
Related Organizations
- Acknowledgements & Disclosure
- We thank participants at the Boston University IP Day-2024 Conference for comments and feedback. We thank Hansen Zhang for providing excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33056
- Pages
- 66
- Published in
- United States of America
Table of Contents
- Introduction 3
- Estimating the Value of Patents 6
- Background 6
- The kogan2017technological approach 8
- Estimation approach 8
- KPSS values and underlying patent value 11
- Using KPSS to compare mean values of groups of patents 12
- Estimating the Value of Patents with Multiple Patent Types 15
- Two patent types granted on different days 15
- Two patent types granted on same day 16
- Simulations 18
- Private Value of Science and non-Science Patents 19
- Data and Measurement 19
- Classifying Patents in Science-based and Non-Science-based 20
- The Private Value of Science and Non-Science Patents 21
- Validation: the private and scientific value of invention 23
- Patent private value and science premium 24
- Main analysis 24
- The economic value of patents by technological sector 26
- Robustness checks 27
- Science-based inventions and patent quality 27
- Discussion and Conclusion 29
- KPSS patent value estimation methodology 3
- Distribution of KPSS values 46
- Revisiting the KPSS method to handle multiple patents granted in a single day 6
- Correcting the bias in KPSS estimates if more than one patent is granted on a single day 6
- Estimating the Value of Patents with Multiple Patent Types 3
- Supplementary results 3
- Simulated data where signal values are drawn from two different distributions 3
