What Is a Patent Worth? Evidence from the U.S. Patent 'Lottery'
57 Pages Posted: 17 Dec 2015 Last revised: 15 Mar 2017
Date Written: March 14, 2017
We provide evidence on the value of patents to startups by leveraging the 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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