In many countries, including recently the United States, holders of patents must pay a renewal fee to keep their patents in force. If that fee is not paid in any one year, the patent is permanently canceled. Assuming that renewal decisions are based on economic criteria, agents will renew their patents only if the value of holding them an additional year exceeds the cost of renewal. Observations on the proportion of patents renewed at different ages, along with the relevant renewal fee schedules, will thus contain information on the distribution of the holding values of patents and on the evolution of this distribution over the life span of the patents. Since patent rights are seldom marketed, renewal data are one of the few sources of information on patent value. This paper considers how that information can be put to use.
Ariel Pakes and Margaret Simpson
The Brookings Institution
1989
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