What Is a Patent Worth? Evidence from the U.S. Patent “Lottery”

By Joan Farre-Mensa, D. Hegde, Alexander P. Ljungqvist. Journal of Finance, 2019

227 citations recorded by the source corpus.

We provide evidence on the value of patents to startups by leveraging the quasi-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.

Subfields: Accounting, Economics and Econometrics, Management of Technology and Innovation

View Paper: https://www.semanticscholar.org/paper/ccf9978c26b127eb92db4f4a21e4c16cbed7e90a

Citations in the corpus

• Equity crowdfunding in Germany and the United Kingdom: Follow-up funding and firm failure (2018, unknown): “Farre-Mensa et al. (2017) show that startups with patents have an 80 percent higher sales growth five years after they filed the first patent application and higher-quality follow-on innovation.”
• Economics, Fairness and Algorithmic Bias (2020, unknown): “17This includes criminal cases to judges (Kling, 2006), patent applications to patent examiners (Sampat and Williams, 2014; Farre-Mensa et al., 2017); foster-care cases to foster care workers (Doyle Jr et al., 2007; Doyle Jr, 2008); disabilityinsurance applications to examiners (Maestas et al.,…”