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The economic value of patent portfolios

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  • Alfonso Gambardella
  • Dietmar Harhoff
  • Bart Verspagen

Abstract

Patent holders may choose to protect innovations with single patents or to develop portfolios of multiple, related patents. We propose a decision‐making model in which patent holders allocate resources to either expanding the number of related patents or investing in higher value of patents in the portfolio. We estimate the derived value equation using portfolio value data from an inventor survey at the level of individual inventions rather than the firm as a whole. We find that investments in individual inventions exhibit diminishing returns, and that a good part of the value of a portfolio depends on adding new patented inventions. Also, while diminishing returns to individual inventions are stable across subsamples, the returns to portfolio size vary between complex and discrete industries, and between inventions that are science‐based or driven by customer information. When firms seek to strengthen appropriability, the returns to an increase of portfolio size are not different from the sample average. Thus, a higher number of inventions in a portfolio may reflect both stronger appropriability via patents and genuine creation of value.

Suggested Citation

  • Alfonso Gambardella & Dietmar Harhoff & Bart Verspagen, 2017. "The economic value of patent portfolios," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 735-756, December.
    • Handle: RePEc:bla:jemstr:v:26:y:2017:i:4:p:735-756
    DOI: 10.1111/jems.12210
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    Cited by:

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    2. Yuanying Chi & Ruoyang Li & Jialin Li & Shuxia Yang, 2024. "Research on Static Evaluation of Economic Value of “Distributed PV +” Model," Sustainability, MDPI, vol. 16(7), pages 1-17, March.
    3. Ning, Lutao & Guo, Rui & Chen, Kaihua, 2023. "Does FDI bring knowledge externalities for host country firms to develop complex technologies? The catalytic role of overseas returnee clustering structures," Research Policy, Elsevier, vol. 52(6).
    4. Gambardella, Alfonso, 2023. "Private and social functions of patents: Innovation, markets, and new firms," Research Policy, Elsevier, vol. 52(7).
    5. Gnekpe, Christian & Jimenez, Alfredo, 2023. "Smoke signal: When firms' patent strategy and local patent protection system affect equity stakes in cross-border acquisitions," Journal of International Management, Elsevier, vol. 29(6).
    6. Kathryn Rudie Harrigan & Yunzhe Fang, 2020. "The financial benefits of persistently high forward citations," The Journal of Technology Transfer, Springer, vol. 45(2), pages 619-647, April.
    7. Chung, Park & Sohn, So Young, 2020. "Early detection of valuable patents using a deep learning model: Case of semiconductor industry," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    8. Brachtendorf, Lorenz & Gaessler, Fabian & Harhoff, Dietmar, 2020. "Truly Standard-Essential Patents? A Semantics-Based Analysis," Rationality and Competition Discussion Paper Series 265, CRC TRR 190 Rationality and Competition.
    9. Appio, Francesco Paolo & Baglieri, Daniela & Cesaroni, Fabrizio & Spicuzza, Lucia & Donato, Alessia, 2022. "Patent design strategies: Empirical evidence from European patents," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    10. Jinyoung Kim, 2015. "Patent Portfolio Management of Sequential Inventions: Evidence from US Patent Renewal Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(2), pages 195-218, September.
    11. Xue Yang & Hao Zhang & Die Hu & Bingde Wu, 2023. "The timing dilemma: understanding the determinants of innovative startups’ patent collateralization for loans," Small Business Economics, Springer, vol. 60(1), pages 371-403, January.

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    More about this item

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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