We provide evidence on the value of patents to startups by leveraging the random assignment of applications to examiners with different propensities to grant patents. Using unique data on all first-time applications filed at the U.S. Patent Office since 2001, we find that startups that win the patent “lottery” by drawing lenient examiners have, on average, 55% higher employment growth and 80% higher sales growth five years later. Patent winners also pursue more, and higher quality, follow-on innovation. Winning a first patent boosts a startup’s subsequent growth and innovation by facilitating access to funding from VCs, banks, and public investors.
Raj Chetty is a rising star in economics. After graduating from Harvard at the age of 23, he became an assistant professor at Berkeley, where he got tenure only four years later. Since then he won the John Bates Clark Medal in 2013 and moved to Stanford in 2015. His latest research is concerned with the question of upward mobility in society and how it affects innovation and economic growth. Continue reading How important is social mobility for innovation and growth?
The topic of patent trolls was already featured here before. Apparently it’s so hot right now that it got covered in Last Week Tonight with John Oliver. Check it out, it’s really fun to watch!