Patent Valuation, International Intellectual Property Rights and Innovation

My research addresses three questions. The first is, does the value of a patent depend on its family size and composition? In the literature on technological change, patents are the most widely used intangible rights to proxy for innovation. However, there is a consensus among innovation economists that the current valuation methods (patent count, citations, renewals, etc.) have limitations. With Walter Park, I create and test the robustness of a patent valuation method, termed "family size and composition patent valuation method," and I hypothesize that the value of patents depends both on the number of the legal jurisdictions where patents are protected and on the market size of the countries that constitute those jurisdictions. We use renewal data, as independent confirmation data, to help demonstrate the predictive accuracy of this method in determining the likelihood of patent renewal and patent survival.Given these results to the first question, the second question investigates the impact of Intellectual Property Rights (IPR) on the flow of valuable knowledge capital and on technology gaps, using the new "family size and composition patent valuation method." The chapter develops and estimates a model of international patenting and Total Factor Productivity (TFP) behavior. I find that IPR protection positively impacts the flow of local innovation and the diffusion of valuable knowledge and TFP. Using the citation method of valuing patents tends to underestimate the impact of IPR on the diffusion of valuable innovation.The third question focuses on the impact of IPR on innovation and technology transfer in Africa. The study investigates whether stronger patent rights protection pushes out the frontiers of technology by favoring the emergence and flow of valuable innovation. I find that stronger IPR protection favors the generation of important innovation as well as the diffusion of valuable technology. Moreover, the impact of local innovation is larger in magnitude than the impact on technology diffusion. This suggests that previous results were likely driven by proxies used for innovation. Further IPR-related data collection and a cautious strengthening of IPR to foster the generation of valuable knowledge capital in Africa are the implications for policy.