On Average a Patent in EU-8 Countries is Worth About 3 Million Euros.
The EU Commission has published the final Lot 2 of a study on patents under the title "What are patents actually worth? - the value of patents for today's economy and society":
"[...] This Report summarizes the results of detailed technical studies about the value of patents in Europe. From the results of these studies it highlights some policy implications.
The analysis focussed on four major areas that are particularly important for understanding the impact of patents on today's knowledge economy and societies at large, viz.:
Monetary value of patents
Economic and social impact on patents, and articularly
Share of patents used for commercial and industrial purposes
Patent licensing
Creation of new firms from patents, and implications for employment
Relationships between patents, R&D, and innovation
Inter-industry differences. [...]"
The study concludes as follows:
"[...] This Report showed that the value of patenting, i.e. the difference between having a patent or not, can be quite high, and in this respect it can significantly encourage innovation. This is certainly so for the large firms, but it is even more so for smallmedium technology specialists, spin-offs or start-ups who have no other means of appropriating rents from their innovations than a legal right.
Specifically, we found that on average a patent in our EU-8 countries is worth about 3 million euros. In fact, since the distribution of patent values is very skewed only very few patents are worth this much or even more. However, we also found that the median patent is worth 300 thousand euros, which means that the typical patent can be quite valuable too.
Such high values make patents a natural target for policy. In particular, we found that there is room for increasing the economic utilization of patents, as almost one third of them are not used. In this respect, we found two policy targets for enhancing the rate of utilization of patents:
a) the large firms, which have sizable shares of unused patents. Some of them are not used, but play a strategic role, as they are employed to block the use of technology by rivals. Yet, they also produce several technologies as by-product of their large R&D activities. These 'sleeping' patents amount to a significant reservoirs of unused technologies that could be exploited by the patent holder or by other parties.
b) the small technology-based firms, which have a higher shares of licensed patents than the large firms. More generally, the so-called 'open innovation systems' (Chesbrough, 2003) can seriously help the diffusion and the widespread use of patented technologies.
We also argued that to enhance the rate of utilization of patents the most effective strategy is to encourage the growth of technology markets. Other means, like reducing the patenting costs of small firms, may only induce them to patent less valuable, and hence less usable technologies, thereby aggravating rather than solving the problem.
To encourage technology markets a first important policy target should be the reduction of transaction costs in technology trade. Our analysis showed that they produce serious impediments to patent licensing. Tools for achieving this goal range from the creation of standard contracts for technology trade that reduce contractual ambiguities; to the formation of intermediating companies that facilitate the match of buyers and suppliers; to actions that define standard prices for technologies according to their characteristics, as well as public information about technology prices.
Actions to favour the licensing and diffusion of large firm patents are also important, but they are also less obvious. The paradox here is that these firms have many unused technologies, and they would even like to license some of them. Yet, our technical studies found that either they do not make enough efforts to do so, or even when they do others are not so easy about buying technologies from a company that is seen as a threatening potential rival in the same field. The large reservoirs of technologies of these firms however calls for serious thoughts about how to make them available more widely, as other studies like Rivette and Kline (2000) have noted.
Our analysis also confirmed the conventional wisdom that there are different trends in Europe in terms of utilization of patents, effectiveness of technology markets to enhance their use, and the formation of new technology-based companies. The UK model is closer to the 'open innovation' model than Germany. France and Italy are closer to the latter, while Denmark and the Netherlands are more similar to the former. Spain is approaching the UK model. In this respect, an ideal combination of the two models is to encourage the use of large firm German technologies along with the diffusion of technologies from small firm UK technology specialists. Clearly, things are not black or white, and large firm UK technologies, as well as smaller technology makers in Continental Europe can play a role too.
A final important remark is that we uncovered a potentially interesting role for the New Member States. Hungary shows high rates of technology licensing and formation of new companies from patented technologies. This was not unexpected. Less advanced economies find it relatively easier to concoct new technologies and ideas in areas in which they have some specialization and expertise, than making costly investments in large scale downstream assets to develop them. Technology markets can then become a means by which these countries sell their technologies without having to incur these costly investments. In turn, if these markets exist and function, companies in these countries are motivated to invest in the initial ideas as they know that they can profit from selling them. They do not need to make the full downstream investments, which can discourage them to carry out the initial investment in the innovation. Israel and Ireland are good examples. [...]"
The term "open innovation" has been coined for an increasing focus of firms on knowledge produced outside their own domain either from the public sector or more importantly from other private firms including knowledge generated abroad.
final Lot 2 of a study on patents under the title "What are patents actually worth? - the value of patents for today's economy and society":