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  • 2017
  • Working Paper

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

By: Joan Farre-Mensa, Deepak Hegde and Alexander Ljungqvist
  • Format:Print
  • | Language:English
  • | Pages:60
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Abstract

We provide evidence on the value of patents to start-ups by leveraging the 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 start-ups 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 start-up’s subsequent growth and innovation by facilitating access to funding from VCs, banks, and public investors.

Keywords

Patents; Business Startups; Innovation and Invention

Citation

Farre-Mensa, Joan, Deepak Hegde, and Alexander Ljungqvist. "What Is a Patent Worth? Evidence from the U.S. Patent 'Lottery'." NBER Working Paper Series, No. 23268, March 2017. (Previous version circulated under the title “The Bright Side of Patents”.)
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    Patent Trolls and Small Business Employment

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    • 2016
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    • February 2016
    • Review of Financial Studies

    Do Measures of Financial Constraints Measure Financial Constraints?

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More from the Authors
  • Patent Trolls and Small Business Employment By: Ian Appel, Joan Farre-Mensa and Elena Simintzi
  • Patent Trolls and Small Business Employment By: Joan Farre-Mensa, Ian Appel and Elena Simintzi
  • Do Measures of Financial Constraints Measure Financial Constraints? By: Joan Farre-Mensa and Alexander Ljungqvist
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