Patents are often used as indicators for economic and innovative progress.1 The assumption is that many patents represent innovation, and also that many innovations are patented. Patent records thus correlate with innovation.
A fascinating new paper, “Reassessing patent propensity: evidence from a data-set of R&D awards 1977-2004,” by Roberto Fontana, Alessandro Nuvolari, Hiroshi Shimizu, and Andrea Vezzulli (Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon, Working Papers series number 2013/09; Mar. 2013), carefully examines this issue. The authors studied the innovations from the ”R&D 100 Awards” competition organized by the journal Research and Development, which, since 1963, “has been awarding this prize to the 100 most technologically significant new products available for sale or licensing in the year preceding the judgments.” I.e., this is a list of important and “technological breakthrough” innovations over almost 3 decades.
The authors searched the patent records for all of these innovations to determine which of them were patented or not, and conclude “a relative low number of important innovations are patented“. In particular, they found that only about 10% of “important” inventions are patented (this number varied a bit based on the industry). This implies that most important innovations are not patented. For most innovations, the innovating companies rely on trade secrecy, lead time/first to market advantages, or other strategies, instead of on the patent system.
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A fascinating new paper, “Reassessing patent propensity: evidence from a data-set of R&D awards 1977-2004,” by Roberto Fontana, Alessandro Nuvolari, Hiroshi Shimizu, and Andrea Vezzulli (Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon, Working Papers series number 2013/09; Mar. 2013), carefully examines this issue. The authors studied the innovations from the ”R&D 100 Awards” competition organized by the journal Research and Development, which, since 1963, “has been awarding this prize to the 100 most technologically significant new products available for sale or licensing in the year preceding the judgments.” I.e., this is a list of important and “technological breakthrough” innovations over almost 3 decades.
The authors searched the patent records for all of these innovations to determine which of them were patented or not, and conclude “a relative low number of important innovations are patented“. In particular, they found that only about 10% of “important” inventions are patented (this number varied a bit based on the industry). This implies that most important innovations are not patented. For most innovations, the innovating companies rely on trade secrecy, lead time/first to market advantages, or other strategies, instead of on the patent system.
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