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Patent Value and Citations: Creative Destruction or Strategic Disruption?

43 Pages Posted: 8 Nov 2013 Last revised: 6 Aug 2014

David Abrams

University of Pennsylvania Law School

Ufuk Akcigit

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Center for Economic and Policy Research (CEPR)

Jillian Popadak Grennan

Duke University - Fuqua School of Business

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Date Written: November 5, 2013

Abstract

Prior work suggests that more valuable patents are cited more and this view has become standard in the empirical innovation literature. Using an NPE-derived dataset with patent-specific revenues we find that the relationship of citations to value in fact forms an inverted-U, with fewer citations at the high end of value than in the middle. Since the value of patents is concentrated in those at the high end, this is a challenge to both the empirical literature and the intuition behind it. We attempt to explain this relationship with a simple model of innovation, allowing for both productive and strategic patents. We find evidence of greater use of strategic patents where it would be most expected: among corporations, in fields of rapid development, in more recent patents and where divisional and continuation applications are employed. These findings have important implications for our basic understanding of growth, innovation, and intellectual property policy.

Keywords: productive innovation, defensive innovation, patents, creative destruction, citations, patent value, competition, intellectual property, entrepreneurship, strategic patenting, defensive patenting, patent thickets, fencing patents

JEL Classification: O3, L2, K1

Suggested Citation

Abrams, David and Akcigit, Ufuk and Grennan, Jillian Popadak, Patent Value and Citations: Creative Destruction or Strategic Disruption? (November 5, 2013). PIER Working Paper No. 13-065; U of Penn, Inst for Law & Econ Research Paper No. 13-23. Available at SSRN: https://ssrn.com/abstract=2351809 or http://dx.doi.org/10.2139/ssrn.2351809

David S. Abrams

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

Ufuk Akcigit (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

HOME PAGE: http://www.ufukakcigit.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Center for Economic and Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Jillian Popadak Grennan

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

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