This Small Business Innovation Research Phase I project develops an economic model and accompanying software with which to measure the dollar value of an arbitrary international patent portfolio. The discrete choice to file a patent application in each of a set of foreign countries is held constant, and the cross-sectional variation in market size and the quality of patent protection is exploited to recover the underlying value distribution. Although this method is not without flaws, it possesses several advantages over the only other method that has been used to assign dollar values to the distribution, namely patent renewal models; for example, it generates ex ante value estimates of the worldwide return to patent protection, even for countries with zero renewal fees, rather than ex post estimates for a single country. The principal focus of Phase I research is determining the feasibility of transferring this method to the level of the firm. After appropriate modifications to the model, it is to be tested in three contexts: (1) cross-sectionally, on four critical technology datasets from the l990s; (2) over time, on a set of pharmaceutical patents from the last 15 years; (3) in conjunction with firm-level total factor productivity estimates, employing a subset of the pharmaceutical data.There are as many potential applications for this method as there are current uses of R&D input data and patent statistics. Firm-level uses, which are the focus of this project include: estimation of firm- and business unit-level productivity; valuation of patent portfolios for licensing, merger and acquisition, and securities analysis; strategic R&D management; competitive intelligence assessment; and policy analyses of international competitiveness.
