Concordance and complementarity in IP instruments

ABSTRACT

This work investigates the relationship between proxies of innovation activities, such as patents and trademarks, and firm performance in terms of revenues, growth, and profitability. By resorting to the virtual universe of Italian manufacturing and service firms, this work provides a rather complete picture of the Intellectual Property (IP) strategies pursued by Italian firms, in terms of patents and trademarks, and studies whether the two instruments for protecting IP exhibit complementarity or substitutability. In addition, and to our knowledge novel, we propose a measure of concordance (or proximity) between the patents and trademarks owned by the same firm and we then investigate whether such concordance exerts any effect on performance. The results suggest that while patents and trademarks independently exert a relevant impact on firm performance, there is no convincing evidence in favour of a complementary role of IP.     

Composite value index of trademark indicators: A market value analysis using Tobin's Q

This paper provides novel empirical evidence on the market valuation of a firm's intangible assets for U.S. firms during the period 1991–2015, exploring the relationship between Tobin's q, R&D, advertising, utility patents, international patent applications, design patents, trademarks, and value weighted IP measures. The Tobin's q is found to be positively and significantly associated with the proposed composite value index of trademark indicators above and beyond the other measures of intangible assets. The paper articulates some managerial implications on how firms could benefit from investing in trademarking and enlarge market value through the combination of multiple IP strategies.     

R&;D market value under weak intellectual property rights protection: the case of India

The relationship between R&D and market value has attracted the interest of many scholars within different fields, but scant attention has been paid to the countries with weak protection of intellectual property rights (IPR). This is unfortunate, since this problem is potentially highly relevant for IPR policy in developing countries. In particular, several questions arise when the problem of R&D market value is analyzed in a country where IPR protection is weak. First, there are concerns regarding incentives (i.e., private returns) for firms to invest in R&D when IPR is only weakly protected. Second, significant differences could emerge in the market valuation of R&D investments of domestic and foreign firms, above all in those industries where spillovers are more likely. To examine these issues, this paper investigates the market valuation of R&D investments of a panel of 219 R&D-reporting domestic and foreign firms publicly traded in India with an empirical analysis. First, the market valuation of the R&D capital for the whole sample is positive and higher than those obtained in U.S. or European countries from similar analyses. Second, in the sub-samples of the domestic and foreign firms, the market value of R&D investments of foreign firms is not significantly different from zero, while the valuation coefficient of domestic firms is four times higher than that obtained on the whole sample. Third, in science-based industries the difference between domestic and foreign firms is smaller than in the other industries. The policy implications of these findings are discussed.     

Trademark or patent? The effects of market concentration,customer type and venture capital financing on start-ups’ initial IP applications

We analyse the initial IP applications of 4,703 start-ups in the U.S., distinguishing between trademark and patent applications. Our empirical results show that start-ups are more likely to file for trademarks instead of patents when entering markets with a higher market concentration. Furthermore, we find that start-ups that are primarily active in business-to-consumer markets instead of business-to-business markets are more likely to file trademarks. Finally, the involvement of a venture capitalist (VC) affects the initial IP application. VC-backed start-ups are more likely than other start-ups to file initial IP in the form of trademarks rather than patents. This paper contributes to research on the use of IP rights in start-ups and to the literature on new venture strategy.     

Which firms use trademarks? Firm-level evidence from Germany on the role of distance,product quality and innovation

ABSTRACT

Trademarking firms are more productive, generate higher profits, and have a better survival rate. Trademarking firms are in one word more successful, which might motivate non-trademarking firms to adopt a trademark strategy. But this does not seem to be the case. The proportion of trademarking firms in the German business sector amounts to just 18%. This figure is quite low, given that nearly each firm has reputation to protect. But why does the vast majority of firms not have registered trademarks? Using a representative sample of German firms, the present paper links certain firm characteristics to a firm’s propensity to register trademarks. The empirical results point to circumstances under which trademarks are significantly more often used: this is the case where a large distance between a firm and its customers exists, a firm’s product quality is difficult to assess, a firm’s products are characterised by a limited (but not strong) substitutability, and where a firm is engaged in R&D and introduces innovative products. Trademarks are considerably less frequently used if none of this is the case.     

Financial and product market integration: Responses of Japanese firms

Abstract and Key Results

Patenting and licensing by Spanish firms: Available survey evidence

This paper presents the results of the OEPM (Spanish Patent and Trademark Office)/OECD (Organisation for Economic Co-operation and Development) survey on the economic and financial uses of patents carried out in 2008 among Spanish business applicants of OEPM patents. It also summarizes evidence from previous surveys. All available information indicates that only a few Spanish firms holding patents license them out. Results from the OEPM/OECD survey also reveal that obtaining public support is the first financial use of patents for Spanish firms. Responses to the same OECD questionnaire by EPO patent applicants from several European countries are quite different: licensing out is an extended practice among EPO patent holders from different countries, including Spain, and convincing venture capitalists and private investors are their two most important financial uses of patents. In our view this suggests that there are significant differences across European countries as regards the development of national technology markets and results from international surveys are driven by responses from the largest and more developed countries. The drivers and actors in markets for patents that only protect inventions nationally may be quite distinct from those in markets for patents that protect inventions regionally, such as EPO patents within Europe.     

A critical appraisal of IBM’S patent pledge model: The impact of patent quality on open source software START-UP’S market entry decision

In 2005, IBM provided open access to 500 of their software patents to establish a platform to further innovation. Recently, a paper by Wen and her colleagues empirically analyzed this relationship and found a positive association between IBM's patent pledge and open source software start-up firms' market entry. Despite their seminal findings, it is somehow questionable whether start-up firms enter markets regardless of the patent value of the market, as small-to medium-sized firms such as start-ups have a practice of selectively entering markets. By complementing Wen, Ceccagnoli and Forman's paper, we not only provide more contextual explanations, but also show that start-up firms tend to selectively enter markets where patents are filled with younger and higher citation rates.     

Innovative Output,Productivity and Profitability. A Test Comparing USPTO and EPO Data

The aim of this paper is to test whether patent‐based indicators are still reliable measures of innovativeness in light of organizational changes in the field of Intellectual Property Rights (IPR) protection and the regulatory reforms already occurred and under way, respectively, at the US Patent and Trademark Office (USPTO) and the European Patent Office (EPO). For most high‐tech industries, patents represent an outcome of the production process and their number can be taken as a proxy for a firm's ability to improve its productivity growth and profitability. The case study reported here concerns the biotechnology industry in Italy, whose firms, by definition, have Intellectual Property (IP) activities in their portfolios. For this purpose, we use a unique dataset which collects balance sheet items and patent information from EPO and USPTO. After linking firms' financial and production data with the patent information, we estimate a modified knowledge production function in which the dependent variable is alternatively (labor) productivity growth and profitability. Although based on a quite small sample, our findings provide some indication of a statistically significant relationship between patents with the EPO and both productivity growth and, in particular, profitability. This suggests that firms might pursue different strategies when patenting with the USPTO and the EPO.     

Coopetition and innovation in high-tech firms: What we can learn from analysis of the semiconductor industry's patents

This study investigates coopetition among the 16 semiconductor firms that figured among the top 10 by revenue from 2009 to 2019 using patent data obtained from the Derwent World Patents Index™ (DWPI), considering records available for the selected firms published and indexed up to July 26, 2020. Only 1791 (0.17%) records from a total of more than 1.1 million have two or more of these competing firms as assignees (i.e., they are records for joint patents involving these firms), indicating the existence of coopetition in this scenario. These joint patents demonstrate coopetition between firms from different countries and in the main areas in which their patents are classified, indicating that they may coopete in those areas. Furthermore, mergers and acquisitions and joint ventures may influence coopetition and innovation, resulting in joint patents. Finally, a framework that consolidates the main findings is presented to guide future research. We contribute to the coopetition literature with novel inputs. From a managerial perspective, the findings can be used to build strategies to better exploit the potential of patents.     

Agglomeration and innovation of knowledge intensive business services

ABSTRACT

For some time now, the research focusing on Knowledge Intensive Business Services (KIBS) has been very active. Observing that knowledge as a production factor is only becoming more and more pronounced, this focus is well-grounded. It is therefore important to examine how these knowledge-hubs gain and propagate their knowledge. We hypothesize that KIBS (as many other sectors) benefit from intra-industry knowledge spillovers facilitated by geographical concentration. Our focus is the innovative capacity of KIBS, which we measure through trademarks registered by KIBS firms. While there may be several mechanisms facilitating knowledge spillovers, we can identify local intra-sectoral labor mobility as one. Accessibility measures are used to assess the geographical attenuation of the spillover effects. Results show that the distance decay of spillovers is fast. Only local concentrations of KIBS seem to be of importance. Over longer distances, we instead observe negative consequences for trademarking, indicating possible spatial competition effects.     

Trademarks and the patent premium value: Evidence from medical and cosmetic products

The determinants of the premium value of patents for medical and cosmetic products are analyzed with respect to a complementary IP strategy such as trademarks. I discuss a novel method and database to gauge combinations of patent and trademark pairs regarding the same innovative project. The premium value is computed through a model of renewal decisions for the patent cohorts 1985–1990 that have been designated in the U.K. and Germany. After taking into the account several firm characteristics and patent indicators typically used in the literature, I find ample evidences that patent and trademark pairs are featured by higher valuations.     

Contracting for technology transfer: patent licensing and know-how in Brazil

Using contract-level data, we study the relation between the inclusion of know-how in cross-border patent licensing agreements and the contractual terms used by firms to deal with moral hazard risks. We use official data on international technology contracts with patent licensing terms registered by affiliated and unaffiliated parties before the Department of Technology Transfer of the National Institute of Intellectual Property (INPI) in Brazil between 1996 and 2012. We find that contracts between unaffiliated parties involving know-how transfer show distinctive contractual and technology features compared to the rest: (i) they involve younger but lower quality technologies (compared to contracts without know-how); (ii) they are more prone to up front lump-sum payments than royalty or combined payments (royalty and fixed); and (iii) they are more likely to be accompanied by the licensing of other IPRs, in addition to patents, such as trademarks.     

Explore the new relationship between patents and market value: a panel smooth transition regression (PSTR) approach

This paper is the first research applying the new approach, panel smooth transition regression (PSTR) model, in the field of patent analysis. This study uses PSTR model to verify whether there is a single threshold effect of Herfindahl–Hirschman Index of patents (HHI of patents) on the relationship between patents and market value in the American pharmaceutical industry. The results demonstrate that HHI of patents moderates the relationship between market value and patent performance, patent counts/assets and patent citations/assets. When HHI of patents is less than or equal to the threshold value, 0.3220, the positive relationship between patent performance and market value is lower. Once HHI of patents is more than the threshold value, 0.3220, the positive relationship between patent performance and market value is higher. This study points out that the second regime is optimal because the extent of the positive relationship between patent performance and market value is higher.     

Born-Globals and Culturally Proximate Markets

• In this paper we focus on the differences between born-globals and older firms. We compare whether cultural proximity is important for born-globals and older firms and whether international or technological knowledge drives their internationalisation. In addition, we compare whether born-globals and older firms are proactive or reactive in their choice of culturally proximate markets.
• Our research suggests that born-globals tend to internationalise rapidly into markets ready to adopt their technology. This is driven by the need to establish a revenue stream (cash flow) as quickly as possible. These born-globals usually seek larger advanced economies, which are often culturally similar (proximate) and offer economies of scale; reducing risk for inexperienced firms. Indeed, born-global firms are more willing than older firms to move from culturally proximate to culturally non-proximate markets very quickly.
• Utilising an abductive approach based on case studies, our findings show that born-globals use their technological knowledge and networks and are proactive when they enter culturally non-proximate markets. Born-globals must assess a new market for its ability to provide a revenue stream very soon after entry. If the culturally proximate market does not offer this, then they will leverage technological knowledge and networks to move rapidly into nearby non-proximate markets where they perceive better opportunities for building a customer base or new funding alternatives to sustain the firm in their early foreign market forays.
• Our research significantly extends theory in highlighting that born-globals rely more on technological experience and display proactive behaviour more than older firms which can draw on previous international experience.

     

Implications of uncertain patent rights for German start-ups’ commercialisation activities and access to external capital

Start-ups may benefit in two ways from patenting their inventions: from the appropriation value and the certification effect of patents which reveals the ventures’ ‘quality’ to investors. As long as the patent office’s grant decision is pending both benefits may not realise. We confirm for a data-set of German start-ups that pending patent applications decrease the likelihood of market launch for new ventures. Regarding the certification effect, we find that pending patent applications attract risk-seeking investors, while more cautious investors do not react upon pending patent applications.     

Responsible intellectual property strategy for sustainability transition - An exploratory study

In this paper, we propose a responsible intellectual property (IP) strategy (R-IPS) framework based on five exploratory case studies of sustainable companies in energy, nutrition, consumer electronics, manufacturing and water treatment sectors. These companies responsibly use IP assets to create positive social and environmental impact (or reduce negative impact), and unlock new opportunities for financial (economic) gains. The extent to which firms today use IP rights such as patents and trademarks, and IP more broadly (including informal intellectual assets such as data and trade secrets, and contracts) as a strategic tool to facilitate sustainability remains to be understood better. More specifically, we need understanding of how companies could, or even should manage and use their IP more responsibly in these changing times during which transitions towards sustainable development are so thoroughly and urgently needed. The proposed framework defined using five dimensions namey deliberation/intention, sustainability IP alignment, flexibility and timing, inclusiveness, and co-creation can support managerial decision-making in formulating or re-designing IP strategies to increase organization's social and environmental impact, maximising their contributions (e.g. accelerating transitions) towards building sustainable economies.     

Patents,Competition, and Firms’ Innovation Incentives

This paper presents fresh evidence on the interaction between industrial property rights (patents) and competition, and their joint effect on firms’ innovation. We use panel data of Spanish manufacturing firms for 1990–2006, as well as external information on European Patent Office and US Patent Office patent counts. We construct a new synthetic measure of competition and estimate the impact of patents on this measure at the industry level. Then, the effect of industry-wide competition and patenting on firms’ innovation is estimated at the firm level. Our results suggest that patents reduce the level of competition in the industry, whereas the effect of competition on innovation varies with the type of innovation indicator. Thus, by lowering competition, patents in an industry exert an indirect effect on innovation besides their direct effect. In addition, interaction effects between patents and competition indicate that patents soften the impact of competition changes on firms’ innovation.     

Heterogeneous Partners,R&D cooperation and corporate innovation capability: Evidence from Chinese manufacturing firms

In this paper, we examine the differential impact of cooperation with heterogeneous partners on firms' innovation capabilities. We use the number of joint patent applications of Chinese manufacturing firms from 2008 to 2018 to measure cooperation with different types of partners and the number of corporate patents to measure the innovation capability of firms. The results indicate that R&D cooperation with other enterprises, universities, and research institutions all have a significantly positive impact on the innovation capability of enterprises. However, R&D cooperation with universities or research institutions has a higher positive impact on innovation capability than that with other firms. Different internal and external factors moderate the relationship between heterogeneous partners and the innovation capability of firms. Specifically, firms with higher absorptive capacity will benefit more from R&D cooperation with corporate partners. In contrast, in industries with higher market concentration or where firms are at the technological frontier, cooperation with universities will positively impact their innovation capabilities. Further research demonstrates that absorptive capacity has a more positive moderating effect when the cooperation is between firms in the same industry, compared to R&D cooperation between firms in different industries.