How Redeployable are Patent Assets? Evidence from Failed Startups

48 Pages Posted: 23 Apr 2018

See all articles by Carlos J. Serrano

Carlos J. Serrano

Universitat Pompeu Fabra, Barcelona GSE

Rosemarie Ham Ziedonis

Boston University - Questrom School of Business

Date Written: April 2018

Abstract

Entrepreneurial firms are important sources of patented inventions. Yet little is known about what happens to patents “released” to the market when startups fail. This study provides a first look at the frequency and speed with which patents originating from failed startups are redeployed to new owners, and whether the value of patents is tied to the original venture and team. The evidence is based on 1,766 U.S. patents issued to 285 venture capital-backed startups that disband between 1988 and 2008 in three innovation-intensive sectors: medical devices, semiconductors, and software. At odds with the view that the resale market for patented inventions is illiquid, we find that most patents from these startups are sold, are sold quickly, and remain “alive” through renewal fee payment long after the startups are shuttered. The patents tend to be purchased by other operating companies in the same sector and retain value beyond the original venture and team. We do find, however, that the patents and people sometimes move jointly to a new organization following the dissolution of the original venture, and explore the conditions under which such co-movement is more likely. The study provides new evidence on a phenomenon—of active markets for buying and selling patents—underexplored in the literature and consequential for both entrepreneurial and established firms.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Serrano, Carlos J. and Ziedonis, Rosemarie Ham, How Redeployable are Patent Assets? Evidence from Failed Startups (April 2018). NBER Working Paper No. w24526. Available at SSRN: https://ssrn.com/abstract=3167041

Carlos J. Serrano (Contact Author)

Universitat Pompeu Fabra, Barcelona GSE ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

HOME PAGE: http://www.econ.upf.edu/~cserrano

Rosemarie Ham Ziedonis

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
10
Abstract Views
265
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information