How Can Innovation Screening Be Improved? A Machine Learning Analysis With Economic Consequences for Firm Performance

Abstract

This study utilizes U.S. Patent Office data to explore potential improvements in the patent examination process through machine learning. It shows that integrating machine learning with human expertise can increase patent citations by up to 26%. Using machine learning predictions as benchmarks, I find that the early expiration rate of granted patents positively correlates with examiners' false acceptance rates. These errors negatively impact public companies' operational performance and reduce successful IPO or M&A exits for private firms. Overall, this study highlights significant social and economic benefits of incorporating machine learning as a robo-advisor in patent screening.

Keywords: Machine Learning, Patent Screening, Firm Performance

JEL Classification: C55, G32, O31