Valuation of patents in emerging economies: a renewal model-based study of Indian patents

TL;DR

This paper estimates the private value of patents in India using renewal data, modeling renewal decisions to understand patent valuation and the factors influencing patent longevity and value.

Contribution

It introduces a renewal model-based approach to estimate patent values in emerging economies, incorporating patent characteristics and renewal costs.

Findings

Many patents expire early, indicating low value for most patents.

Certain technology classes have higher patent valuations.

Patent characteristics influence renewal decisions and estimated values.

Abstract

This study uses patent renewal information to estimate private value of patents by technology and ownership status. Patent value refers to the economic reward that the inventor extracts from the patent by making, using or selling an invention. Thus, we measure the value of patent right (private value of patent) from the patentee perspective. Our empirical analysis comprises of 555 patents with application year during 1999 to 2002. The term of these patents either ended in 2018 or lapsed due to non-payment of renewal fee. We model renewal decision of patentee as ordered probit where patent renewal fee increases with the age of patent. Variables such as patent family size, technological scope, number of inventors and grant lag are used as explanatory variables in the corresponding regression. Hence, this paper combines the patentee renewal decision along with patents characteristics and renewal cost schedule to estimate the initial rent distribution. We find that a large number of patents expire at an early stage leaving few patents with high value corroborating the results of studies using European, American and Chinese data. As expected, certain technology class patents enjoy high valuation.