What Is a Patent Worth? Evidence from the U.S. Patent 'Lottery'
70 Pages Posted: 17 Dec 2015 Last revised: 25 Dec 2018
Date Written: December 22, 2018
We provide evidence on the value of patents to startups by leveraging the quasi-random assignment of applications to examiners with different propensities to grant patents. Using unique data on all first-time applications filed at the U.S. Patent Office since 2001, we find that startups that win the patent "lottery" by drawing lenient examiners have, on average, 55% higher employment growth and 80% higher sales growth five years later. Patent winners also pursue more, and higher quality, follow-on innovation. Winning a first patent boosts a startup’s subsequent growth and innovation by facilitating access to funding from VCs, banks, and public investors.
Keywords: Patents, innovation, R&D, entrepreneurship, venture capital
JEL Classification: D23, G24, L26, O34
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