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Discussion Paper Details

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Title: The Economic Value of Patent Portfolios

Author(s): Alfonso Gambardella, Dietmar Harhoff and Bart Verspagen

Publication Date: January 2013

Keyword(s): intellectual property rights, inventors, patents and technical change

Programme Area(s): Industrial Organization

Abstract: Patent holders may choose to protect innovations with single patents or to develop portfolios of multiple, related inventions. We propose a simple decision-making model in which patent-holders may allocate resources to either expanding the number of related patents or investing in higher value of patents in the portfolio. We estimate the derived value equation using portfolio value data from an inventor survey. We find that investments in individual inventions exhibit diminishing returns, and that much of the value of a portfolio depends on adding new inventions. These effects are less pronounced in high-techology industries, when the inventions rely on external information, and when the inventor holds a doctorate. We also find higher returns to an increase of the number of inventions when firms perceive patent protection to be strong. Thus, a higher number of inventions in a portfolio may reflect both genuine creation of value or stronger appropriability via patents.

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Bibliographic Reference

Gambardella, A, Harhoff, D and Verspagen, B. 2013. 'The Economic Value of Patent Portfolios'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9264