Returns to Inventors

Toivanen, Otto; Väänänen, Lotta

doi:10.1162/rest_a_00269

Cited by 68 publications

(53 citation statements)

References 20 publications

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“…We take the fact that earnings peak at t-1 instead of at t as a bureaucratic delay between the time the invention really takes place and the time when the firm submits the application. In particular, inventors receive a 3.5 percent premium the year before submission, a result consistent with Toivanen and Väänänen (2012), who obtain a 1.6 percent premium at the time the patent is granted. We also test whether there is a difference between the applications that will eventually lead to a grant and those that will not, and we find that the inventors who will actually obtain a grant earn a 2 percent higher premium than those who will not (although the patterns are similar in the two cases).…”

Section: Introductionsupporting

confidence: 70%

“…Linking compensation survey data to the NBER patent information from the US Patent and Trademark Office (USPTO), Lerner and Wulf (2007) obtain that offering long-term incentives (i.e., stock options) to corporate R&D heads has a positive effect on firm's patent citations, awards and original patents. Toivanen and Väänänen (2012) use individual-level data, linking a Finnish employer-employee matched dataset to the NBER patent grant data over the period 1991 − 1999. They show that, after controlling for individuals' unobservable heterogeneity, inventors obtain a 1 − 2 percent premium in the year the firm is granted a patent, or a 4 − 5 percent wage increase 4-6 years after (depending on the model specification used).…”

Section: Related Literaturementioning

confidence: 99%

“…Van Reenen (1996) finds that a major innovation raises firms' aggregate wages by 2 percent 4 years after commercialization, on the basis of a sample of almost 600 firms observed over 6 years. Toivanen and Väänänen (2012) estimate inventors' returns to patents by using individual panel data on almost 2, 000 Finnish inventors whose inventions were patented in the U.S. over a period of 9 years (1991 − 1999), and find that inventors obtain a 1 − 2 percent premium in the year the firm is granted a patent, or a 4 − 5 percent wage increase 4-6 years after, depending on the model specification used.…”

Section: Introductionmentioning

confidence: 99%

“…Like in Toivanen's and Väänänen's (2012) pioneer work, we estimate individual returns to patents with a Mincerian wage function augmented with patent application indicators. We add to the previous literature in many respects.…”

Section: Introductionmentioning

confidence: 99%

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Shedding Light on Inventors' Returns to Patents

Depalo

Addario

2014

SSRN Journal

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We estimate individual returns to patents using a unique longitudinal administrative dataset on patents and earnings, following individuals and firms for 20 years (1987)(1988)(1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006). We find that inventors' wages steadily increase before patent applications are submitted to the European Patent Office, reach a peak around the time of submission and then decrease again. We also find that the applications that will eventually lead to a granted patent receive a greater wage increase than those that will not. Finally, we use an event study framework to distinguish among inventor-types and we find that the "star-inventors" (the employees submitting at least three times in their life) receive a lasting wage premium, while the employees with one or two submissions stop receiving the premium after the application date, in line with the "unobserved ability" literature.JEL classification: O31, J31.Keywords: Patents; Wages; Incentives; Inventors; Performance pay; Return. * Domenico Depalo and Sabrina Di Addario, Bank of Italy. We are grateful to David Card, Ernesto Dal Bo, Patrick Kline, Jesse Rothstein, Steven Tadelis, Eliana Viviano and Noam Yuchtman for their excellent comments. We also thank INPS for having provided the employer-employee matched dataset and the team that helped us matching it to Patstat

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Section: Introductionsupporting

confidence: 70%

Section: Related Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Shedding Light on Inventors' Returns to Patents

Depalo

Addario

2014

SSRN Journal

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“…patent is registered. 48 Nevertheless, overall we find a sizeable effect of innovativeness on top income inequality.…”

Section: Magnitude Of the Effectsmentioning

confidence: 71%

Innovation and Top Income Inequality

et al. 2015

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In this paper we use cross-state panel data to show that top income inequality is (at least partly) driven by innovation. We first establish a positive and significant correlation between various measures of innovativeness and top income inequality in cross-state panel regressions. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010. Finally, we show that innovation does not increase broader measures of inequality which do not focus on top incomes, and that innovation is positively correlated with social mobility, but less so in states with more intense lobbying activities.JEL classification: O30, O31, O33, O34, O40, O43, O47, D63, J14, J15

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Escaping the patent trolls: The impact of non‐practicing entity litigation on firm innovation strategies

Huang,

Li,

Shen

et al. 2024

Strategic Management Journal

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Research SummaryNon‐practicing entities (NPEs) are firms that accumulate and acquire patents but do not further develop or implement the patented inventions (known as patent trolling). NPEs seek to receive royalties or profits through out‐of‐court settlements in patent infringement cases. We examine how firms targeted by NPEs in NPE‐initiated litigations (i.e., target firms) shift their innovation strategies and trajectories in response to heightened litigation risks. We theorize and show that after the initial lawsuit, target firms draw more upon their in‐house technologies to reduce the legal ground for further lawsuits. Furthermore, nontarget firms in related technology areas shift their innovation activities away from those of target firms under high NPE litigation risks. These effects are more pronounced with higher innovation costs and under more competitive product markets.Managerial SummaryNon‐practicing entities (NPEs) are known as patent trolls that accumulate and acquire patents but do not further develop or implement these patented inventions. These patent trolls aim to obtain royalties or profits through out‐of‐court settlements in patent infringement cases. We investigate how firms targeted by patent trolls in litigations (i.e., target firms) change their innovation strategies and trajectories to deal with increased NPE litigation risks. After the initial lawsuit, we find that these target firms use their in‐house technologies more to reduce the legal ground for future lawsuits. Moreover, nontarget firms in related technology areas move their innovation activities away from those of target firms under high litigation risks. These effects are stronger when innovation costs are higher and under more competitive product markets.

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Returns to Inventors

Cited by 68 publications

References 20 publications

Shedding Light on Inventors' Returns to Patents

Shedding Light on Inventors' Returns to Patents

Innovation and Top Income Inequality

Escaping the patent trolls: The impact of non‐practicing entity litigation on firm innovation strategies

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