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We survey the economic literature, both theoretical and empirical, on the choice of intellectual property protection by firms. Our focus is on the trade-offs between using patents and disclosing versus the use of secrecy, although we also look briefly at the use of other means of formal intellectual property protection.

We analyse the 'explosion' of patent filings by Chinese residents, both domestically and in the USA during the early 2000s, employing a unique data set of 374,000 firms matching patent applications to manufacturing census data. Our analysis reveals that patenting is highly concentrated among a small number of firms, operating in the information and communication technology (ICT) sector. Although increases in patent filings by these companies are partly driven by increased R&D intensity, our analysis suggests that the explosion of patent filings at the Chinese patent office is driven by factors other than underlying innovative behaviour, including government subsidies that encourage patent filings directly.

This paper analyzes the survival over the subsequent 5-year period of the complete cohort of nearly 162,000 limited companies that incorporated in Britain in 2001. The paper focuses on the relationship between innovation and survival at the firm-level. The data available allow us to look at the intellectual property (IP) activity of all British firms, including that of the cohort of new firms in 2001. The results indicate that IP activity, measured as patenting and trade-marking, is associated with a considerably lower probability of exit. We also find substantial differences in survival probabilities across sectors. In some sectors patenting is associated with a lower probability of exit; however, trade-marking is associated with lower probability in almost all sectors.

A surprisingly small number of innovative firms use the patent system. In the UK, the share of firms patenting among those reporting that they have innovated is about 4%. Survey data from the same firms support the idea that they do not consider patents or other forms of registered IP as important as informal IP for protecting inventions. We show that there are a number of explanations for these findings: most firms are SMEs, many innovations are new to the firm, but not to the market, and many sectors are not patent active. We find evidence pointing to a positive association between patenting and innovative performance measured as turnover due to innovation, but not between patenting and subsequent employment growth. The analysis relies on a new integrated dataset for the UK that combines a range of data sources into a panel at the enterprise level.

We analyze the patent filing strategies of foreign pharmaceutical companies in Chile distinguishing between \"primary\" (active ingredient) and \"secondary\" patents (patents on modified compounds, formulations, dosages, particular medical uses, etc.). There is prior evidence that secondary patents are used by pharmaceutical originator companies in the U.S. and Europe to extend patent protection on drugs in length and breadth. Using a novel dataset that comprises all drugs registered in Chile between 1991 and 2010 as well as the corresponding patents and trademarks, we find evidence that foreign originator companies pursue similar strategies in Chile. We find a primary to secondary patents ratio of 1:4 at the drug-level, which is comparable to the available evidence for Europe; most secondary patents are filed over several years following the original primary patent and after the protected active ingredient has obtained market approval in Chile. This points toward effective patent term extensions through secondary patents. Secondary patents dominate \"older\" therapeutic classes like anti-ulcer and anti-depressants. In contrast, newer areas like anti-virals and anti-neoplastics (anti-cancer) have a much larger share of primary patents.

This article investigates the presence of agglomeration externalities and their effect on innovative activity of companies located in a science park in the UK. We analyze whether close geographical, industrial and technological proximity of firms located in a science park increases firm-level innovative activity measured as patenting. The results provide evidence for the presence of positive inter- and intra-industry knowledge spillovers among firms that are located in very close geographic proximity. The results suggest that knowledge spillovers decay rapidly with geographic distance even within small clusters of firms such as a science park.

A large body of literature estimates private returns to R&D adopting the Griliches knowledge production framework, which ignores the potential impact of spillovers on consistent estimation. Using a panel of twelve manufacturing industries across ten OECD economies, we investigate whether ignoring spillovers leads to bias in the estimated private returns to R&D. We compare results from a common factor framework, which accounts for spillovers and other unobserved shocks, to those from a standard Griliches approach. Our findings confirm that conventional estimates confiate own-R&D and spillover effects, implying that spillovers cannot be ignored even when the interest lies exclusively in evaluating private returns to R&D.

We analyse the impact of the establishment of the Diamond Light Source synchrotron, a large basic scientific research facility in the UK, on the geographic distribution of related research. To account for the potentially endogenous location choice of the synchrotron, we rely on the availability of a ‘runner-up’ site. We use data on academic publications to trace the geographic distribution of related scientific inputs and outputs. Our results suggest that proximity to Diamond had a positive impact on the output of related research. This proximity effect appears to be driven by an increase in inputs rather than the productivity of scientists.

This paper analyzes the association between the number of patenting manufacturing firms and the quantity and quality of relevant university research across UK postcode areas. Our results indicate that different measures of research ‘power’ and ‘excellence’ positively affect the patenting of small firms within the same postcode area. Patenting by large firms, in contrast, is unaffected by research undertaken in nearby universities. This confirms the commonly held view that location matters more for small firms than large firms.