Patents and corporate credit risk

A vast literature documents a positive relationship between patents and companies stock market performance. Nevertheless, evidence on the influence of patents on companies’ debt capacity remains sparse. In this article, we examine the relationship between companies’ patent portfolios and their credit rating, providing relevant, albeit indirect, evidence on patents as a debt funding mechanism. Using a panel dataset on 155 U.S. firms, we find a positive relationship between companies’ credit rating and the size of their patent portfolio. Our indicators for valuable patents, however, provide a mixed picture. While there is a positive link between the average family size of a company’s patent portfolio and its credit ratings, we surprisingly find a significant negative relationship between patent forward citations and companies ratings. We hypothesize that this finding is the result of citations being associated with patent lawsuits, potentially incurring substantial losses on creditors

Standard Essential Patents to Boost Financial Returns

Numerous innovative applications build upon standardized technologies. These technologies increasingly incorporate standard essential patents (SEPs). It is crucial to own SEPs in order to achieve and maintain significant market shares. We test the influence of owning SEPs on a firm's financial performance. In our analysis, we use a unique dataset of firms participating in international standard setting organizations (SSOs). Our results indicate a curvilinear (inverse U-shaped) relationship of owning SEPs on a firm's return on assets. The curvilinear relationship suggests that firms should balance their patent portfolio by holding a share of patents, which are essential for standards, and by holding a share of patents on technologies that are not standardized. Our results further show that the effects of owning SEPs depend on the specific SSO as well as on the size of the patent portfolio. Our findings are a first step toward identifying and assessing the financial impact of patents essential to standards. Our empirical tests suggest that companies should pursue a common strategy for patenting and standardization to exploit patented inventions in technology fields where standards matter

Patent activities in non-R&D-intensive technology areas

Intellectual property protection via patenting can be regarded as an indispensable means to stay competitive at the national and international levels, also in non-R&D-intensive technology areas. As patents can be used as output indicators of innovation, we aim to shed light on the technological output of non-R&D-intensive sectors with the help of in-depth patent analyses. In addition to investigating the absolute numbers and shares of patent filings compared with the high-technology areas, we examine the positioning of non-R&D-intensive sectors within the innovation chain and assess their internationalisation trends within Germany over the last decade. The results of our analyses, which are based on the “EPO Worldwide Patent Statistical Database” (PATSTAT), show that the non-R&D-intensive technology areas are an integral part of the development of research and technology within the world economy. Patents from the non-R&D-intensive areas constitute approximately 40 % of worldwide transnational filings, although the size and importance of the non-R&D-intensive technology areas is highly dependent on national idiosyncrasies and industrial structures. The internationalisation trends reveal that the non-R&D-intensive technology areas are even more strongly targeted toward international markets than high-level technologies, although technologies from non-R&D-intensive are largely positioned at the end of the innovation chain, providing rather downstream or market-oriented inventions

Interplay of patents and trademarks as tools in economic competition

Integrated manufacturing-service systems have been receiving attention recently. The phenomenon of services-to-artifacts companies, namely those specializing in intermediate goods and complex equipment, is increasingly instrumental for long-run competitiveness in fast-changing, high-quality global markets. The debate has so far has remained largely qualitative, and the effective role and relevance of services is rather fuzzy. Against this background, this chapter brings in empirical evidence concerning the evolving business models of a variety of leading innovative manufacturing companies. For this purpose, over 50 manufacturing companies listed in the European Union (EU) research & development (R&D) investment scoreboard are analyzed in terms of patents and trademarks. In particular, trademark strategies are studied in greater depth, and they are sub-divided into goods and services marks and into high and low sophistication. Service marks are used as a supplement to patents, as the service component of industrial offerings is not covered by classic indicators of technical change. The economic data from the EU (EU Scoreboard R&D, sales, growth, employees, profits, or investment) are linked to the patent and trademark data in order to see which balance of goods and service capabilities leads to favorable economic results