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Non-unilateral patents: A novel indicator for assessing innovation performance

21/04/2023| By
Ying Ying Huang,
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Lin Lin Zhang
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Abstract

Mainstream patent indicators focus on inventions protected in large economies, but the world economic landscape has changed so much that their legitimacy has been questioned. Therefore, we propose the concept of non-unilateral patents, defined as patents filed simultaneously at two or more national/regional patent offices and granted in at least one of these offices. Compared with existing indicators (e.g., IP5 patents, triadic patents, and overseas patents), this indicator improves statistical efficiency while reducing the impact of home bias based on single-country patent applications and filtering out relatively low-value patents. More importantly, a significant advantage of the novel indicator is that it improves the visibility of different economies in globalization and can better adapt to the dynamic world landscape.

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Non-unilateral patents: A novel indicator for assessing innovation performance

Ying Huang*, Yifei Yu**, Jia Yuan** and Lin Zhang*

* ying.huang@whu.edu.cn; linzhang1117@whu.edu.cn

0000-0003-0115-4581; 0000-0003-0526-9677

School of Information Management, Wuhan University, China

Center for Science, Technology & Education Assessment (CSTEA), Wuhan University, China

Centre for R&D Monitoring (ECOOM) and Department of MSI, KU Leuven, Belgium

** yifeiyu@whu.edu.cn; jiayuan@whu.edu.cn

0000-0001-5238-1907; 0009-0008-3699-4859

School of Information Management, Wuhan University, China

Center for Science, Technology & Education Assessment (CSTEA), Wuhan University, China

Abstract: Mainstream patent indicators focus on inventions protected in large economies, but the world economic landscape has changed so much that their legitimacy has been questioned. Therefore, we propose the concept of non-unilateral patents, defined as patents filed simultaneously at two or more national/regional patent offices and granted in at least one of these offices. Compared with existing indicators (e.g., IP5 patents, triadic patents, and overseas patents), this indicator improves statistical efficiency while reducing the impact of home bias based on single-country patent applications and filtering out relatively low-value patents. More importantly, a significant advantage of the novel indicator is that it improves the visibility of different economies in globalization and can better adapt to the dynamic world landscape.

Introduction

Patents are an important marker of technological innovation activity and are widely used to measure invention performance, knowledge diffusion, and internationalization of innovation activities (Criscuolo, 2006). The wealth of patent data provides an essential reference for capturing and predicting technology trends, thus attracting the attention of economists and policymakers as a measure of countries’ innovation performance (Tahmooresnejad & Beaudry, 2019). Early studies were often based on national patent data (Bosworth, 1984). With patents registered in the United States Patent and Trademark Office (USPTO) considered to be of greater economic value, they become the primary source of research data (Lengyel et al., 2015; Sheau-Pyng et al., 2012; Yamashita, 2021). However, the quality of national patents varies greatly from country to country, making national patents an imperfect measure for cross-country comparison (Grupp & Schmoch, 1999). To overcome the shortcomings of only using national patent statistics, international patent applications based on the European Patent Office (EPO) or the Patent Cooperation Treaty (PCT) route, as well as triadic patents refer to patent families consisting of patents applied for in Europe, Japan, and the US (Dernis & Khan, 2004), have become the mainstream statistical indicators. Although the growing international cooperation has led to the emergence of various regional and international patent procedures, given the multiple factors such as home bias (Criscuolo, 2006; Li et al., 2007), time effect (de Rassenfosse & van Pottelsberghe de la Potterie, 2007), type of document (Frietsch & Schmoch, 2010), and tendency of patenting strategies in different technology areas (Peeters & de la Potterie, 2006), there are many limitations in using patent statistics to measure innovative R&D activities (Pavitt, 1982; Pavitt, 1985). Therefore, how to select appropriate patent indicators to assess innovation performance has become an essential issue of widespread interest.

With the new round of technological revolution and industrial change is reshaping the global innovation map and economic structure, and the importance of non-triangular economies, represented by China and South Korea, is becoming more and more prominent in the international arena, which makes it necessary to re-examine and develop patent statistics indicators. In this context, scholars have successively proposed indicators such as tetrad patent (Glänzel et al., 2008), transnational patent (Frietsch & Schmoch, 2010), worldwide patent (de Rassenfosse et al., 2013), quadic patent (Huang & Jacob, 2014), IP5 patent (OECD, 2015) better to bridge the differences in patent systems between countries and to emphasize the measurement of invention activities in small open economies and emerging economies. Although the above indicators have revolutionized the definition of patents, most are still based on the perspective of the world’s leading countries and cannot dynamically balance the relationship between countries. Thus, we introduce the concept of non-unilateral patent, defined as a patent that is simultaneously applied for in two or more national/regional patent offices and granted in at least one of these offices. The non-unilateral patents are intended to complement existing international indicators and to provide a relatively comprehensive picture of the world’s technological innovation development by improving the visibility of individual countries and regions globally.

Overview of the non-unilateral patent

Patent index data can be used to analyze the level of technological development and competitiveness of a country or region, which is vital for grasping the global innovation development trend. To avoid statistical distortion, we need to consider the representativeness and universality of patent indicators in a changing environment, which has led to various discussions.

Definition

With the significant increase in patent applications and new patent strategies (Archontopoulos et al., 2007; van Zeebroeck et al., 2009), there is a need to balance better the patent values of different countries, regions, and markets. Distinguishing from previous indicators, we propose a novel indicator called the non-unilateral patent, which represents the set of patents simultaneously filed in two or more national/regional patent offices and granted in at least one. For example, a company files applications with three national patent offices for the same invention. Then, each patent office examines the patent application according to the criteria and procedures. Eventually, the application is granted by two patent offices. We call this type of patent a non-unilateral patent. Conversely, if all of the above patent applications are rejected, it is not included in the category of non-unilateral patents. Figure 1 shows the conceptual differences between non-unilateral patents, IP5 patents, triadic patents, and overseas patents.

Figure 1: The conception of the non-unilateral patent and major patent indicators

Key Points

Although the definition of the non-unilateral patent seems to be simple, i.e., a patent applied for in more than two patent offices and granted by at least one. However, situations still need to be discerned in the implementation process.

(1) Select the patent family

Depending on companies’ market strategy, innovators may wish to protect the same invention in different countries. A group of patents covering the same invention with at least one same priority and are filed multiple times in different countries or international patent offices is known as a patent family. In order to avoid multiple counting of those patents filed in different offices, it is necessary to consolidate patent portfolios according to the patent families.

The basic idea behind a patent family is to group all applications – original and subsequent filings – related to each other via priority filing(s) (WIPO, 2022). There are different definitions and types of patent families. In practice, patent families are not defined by state or law but by databases (Adams, 2006). For example, The INPADOC is an extended patent family from EPO, in which patents are directly or indirectly linked through priority filings. The DWPI patent families are derived from the Derwent World Patents Index (DWPI), constructed based on the novelty principle where new members match technical content with previous ones. However, the definition of each patent family may lead to a different total number of patent families, which in turn leads to statistical bias (Martínez, 2010). For example, Martínez (2011) found that different definitions of patent families impact 25% of families with complex structures, which may have implications for econometric studies that use family size as a proxy for patent value. Hence, researchers need to determine the selection of patent families based on the purpose of their research.

(2) Weigh number of patents

It is widely believed that the distribution of patent values is highly skewed (Griliches, 1990; Harhoff et al., 1999). Simply counting the number of patents will introduce bias into innovation measurement. Although non-unilateral patents consider granted patents filed in multiple patent offices, which are relatively more valuable, the indicator does not capture the imbalance in patent value across countries. A theoretically attractive solution is to weigh patents according to their importance or value (Harhoff et al., 2003).

Market size is the critical factor affecting international patent applications (Eaton & Kortum, 1996; Sláma, 1981; Yang & Kuo, 2008). Case studies show that when a country is considered a preferred market, the company tends to apply for patents in that country (Grupp & Schmoch, 1999). There is relatively little incentive to obtain patents in small economies, where the market for technology and expected benefits are limited. In addition, patent application costs are proportional to the destination’s revenue level and market size (Kabore & Park, 2019). Considering the cost of international patenting, relatively valuable innovations tend to be patented in larger markets. The market size can generally be measured based on sales revenue, import/export volume, and GDP. Thus, the number of patents can be weighted.

Reducing the imitation risk motivates non-resident applications (Eaton & Kortum, 1996). A critical purpose of international filings is to deter other agents in the destination country from imitating the new technology, depending on the technological sophistication of the host firm (Huang & Jacob, 2014; Moussa & Varsakelis, 2017). The higher the threat of imitation in the destination country, the more likely an invention will be patented (Gao & Zhang, 2022). For example, as the ability of Chinese firms to imitate foreign technologies increases, this competitive threat to foreign countries creates an urgency to protect innovations in China (Hu, 2010). Therefore, some scholars suggest standardizing patent counts through national data for the Gross Expenditures on Research and Development (GERD) data or business expenditures on R&D (BERD) (Schmoch & Gehrke, 2022).

Additionally, the propensity to file patents in foreign countries varies depending on the country of origin due to geopolitical circumstances. For example, Canadian and Mexican firms file more patents in the US than European firms (Pavitt, 1985). Geographic proximity influences the results of country comparisons based on particular patent indicators (Schmoch & Khan, 2019). Thus, we recommend a weighted analysis based on the distance between countries.

Empirical Results

Additive manufacturing technology is regarded as a gas pedal of scientific and technological innovation in many fields and a key basic technology to support the development of manufacturing innovation. Exploring the development trend of additive manufacturing technology can systematically portray the global competitive situation and guide development direction. Based on the previous search strategy (Huang et al., 2022), we chose a study period of 2013 to 2022 and obtained 30198 granted patents from Derwent Innovation, a platform that brings together the world’s most comprehensive international patent coverage1. This study uses the DPWI patent family definition, in which each member shares clear priorities with every other family member.

In recent years, countries in Europe, North America, and other emerging economies have regarded additive manufacturing as a strategic emerging industry and increased investment in it (Chen et al., 2017). Figure 2 shows that the number of non-unilateral patents has increased yearly along with the steady growth of granted patents worldwide in the last decade. We counted the share of non-unilateral patents to granted patents and found that the ratio is high due to the low number of granted patents in the previous years. Since 2017, the share has increased from 13.64% to 37.67%. With the continuous development of additive manufacturing technology, assignees and applicants seek patent protection in multiple countries and regions globally.

Figure 2: Number of non-unilateral patents and share of granted patents worldwide

To better characterize non-unilateral patents, we combine current common international indicators from national and company perspectives. At the country level, we determine the original assignee/applicant’s country/region of origin based on the address information provided by the patent issuing authorities. Use this to research assignees/applicants from specific countries/regions. In Figure 3, the different colors represent the number of granted patents in each country and region. China has the most significant number of granted patents, with the US and South Korea in second and third place. However, in the results of the remaining four indicators, the US, Japan, and Germany are the leaders in additive manufacturing technology. The number of patents in each country shows a gradient decrease due to the restrictive criteria of overseas patents, non-unilateral patents, IP5 patents, and triadic patents, one after another. Therefore, if only use granted patents as a criterion, the statistics are influenced by the national scale and the patent strategy. Combining multiple criteria for patent screening can further condense the assessment results.

Figure 3: Major countries/regions of origin for additive manufacturing patents

As a further analysis, we want to investigate how changes in patent indicators affect the assessment of a corporation’s innovation performance. In this section, we selected the top 20 companies regarding the number of granted patents and compared the non-unilateral patents with other patent indicators one by one. The results are shown in Figure 4.

A positive correlation exists between patent family size and patent value (Fischer & Leidinger, 2014; Van Zeebroeck & Van Pottelsberghe de la Potterie, 2011). Thus, non-unilateral patents filter out relatively low-value patents filed in only one country compared to granted patents. We found that most corporations have changed their rankings. Laser from Germany jumped six places at once, with up to 99.22% of its patents owning multiple patent families, reflecting the company’s determination to lay out the global market aggressively. However, the ranking of Stratasys and 3D has slipped, and the above two companies account for about half of the number of granted patents in non-unilateral terms. Then, the non-unilateral party somewhat corrects the statistical bias caused by the skewed patent value.

We include patents filed by companies in foreign countries in the category of overseas patents. The statistics show that the number of overseas patents is always slightly higher than the number of non-unilateral patents, with an average difference of 3.25. Some small fluctuations in the results for non-unilateral patents, such as Siemens dropping one rank. It suggests that overseas patents are often filed in domestic or multiple foreign patent offices and that the indicator encompasses non-unilateral patents.

It is found that the number of non-unilateral patents and IP5 patents show similar results, with the top 5 corporations being HP, GE, Kinpo, XYZ, and UTC. As we adopt the strictest definition of IP5 patents, representing those granted patents filed in more than one IP5 patent office (OECD, 2015), it can be understood to some extent as restricting non-unilateral patents of patent offices. Overall, the number of non-unilateral patents is slightly higher than that of IP5. This proves the IP5 patent office is the leading application processing agency for non-unilateral patents in the sample data. There is a strong positive correlation between non-unilateral, overseas, and IP5 patents. Since our indicator is not limited to geographic regions and patent offices, non-unilateral patents do not introduce significant numerical fluctuations while improving statistical efficiency.

Finally, we focus on the triadic patents. This indicator not only improves the international comparability of patents but is also a powerful indicator for assessing the value of patents (Harhoff et al., 2003; Messinis, 2011). Interestingly, the ranking of the triadic patents could be more consistent. HP ranked excellent in the other metrics, but triadic patents are in 4th place. UTC, ranking 5th in non-unilateral patents, and Raytheon, ranking 10th, both slipped 8 spots in this indicator. Meanwhile, 3D improved by 9 places. Combined with IP5 patent data, we find that although companies frequently file applications in two or more IP5 patent offices, with the US being the primary destination, followed by Europe and China, Japanese patent applications do not dominate, resulting in 62.76% of IP5 patents that do not meet the triadic standard. Therefore, with the substantial rise of emerging economies such as China, national market importance is clearly underestimated using the current definition of triadic patenting (Sternitzke, 2009). In general, the new indicator is not limited to countries or regions and can adapt to the changing international environment, which is an expansion of the current patent statistics indicator system.

Figure 4: The rankings in different patent indicators for 20 corporations

Note: HP=Hewlett-Packard Development Company; GE=General Electric Company; Xerox=Xerox Corporation; Stratasys=Stratasys Ltd.; Kinpo=Kinpo Electronics, Inc.; XYZ=XYZprinting, Inc.; Ricoh=Ricoh Company, Ltd.; UTC=United Technologies Corporation; Boeing=Boeing Company; Epson=Seiko Epson Corporation; Raytheon=Raytheon Technologies Corporation; 3D=3D Systems Corporation; Laser=Concept Laser GmbH; Mimaki=Mimaki Engineering Co., Ltd.; Canon=Canon, Inc.; Siemens=Siemens AG; AMAT =Applied Materials, Inc.; Carbon=Carbon, Inc. ; Farsoon=Hunan Farsoon High-Technology Co.,Ltd.; Cal-Comp=Cal-Comp Electronics and Communications., Ltd.

Conclusions

The non-unilateral patent is a new indicator of patent statistics proposed in this paper. In contrast to previous indicators, non-unilateral patents are designed to make countries in different regions of the world comparable, with the salient feature of considering the position of economies outside the triadic countries in the global technology market. This indicator has been proven to be applied to compare innovation agents at different levels and is simple and more efficient to operate. Therefore, the non-unilateral patent is a good complement to the current system of patent statistics. Although the criterion of “patents filed in more than two patent offices and granted by at least one of them” filters out low-value patents to some extent, non-unilateral patents also include many unevenly valued patents. This is because the indicator does not eliminate the influence of country-specific rules and regulations in the patent granting process, i.e., institutional bias remains. Echoing the key analyses, future research needs to discuss further the application of different patent family definitions to non-unilateral patents. Moreover, in order to better bridge the imbalance in the value of patents filed at different national or regional patent offices, we need to weight the patent counts by a combination of data characterizing market size, technological competitiveness, geographical proximity, and other features, and thus provide insightful data references for systematically portraying the current state of technological development of innovation agents.

Open science practices

Derwent Innovation is the data source for our study. This platform combines a comprehensive set of international patents worldwide with powerful intellectual property analysis tools to monitor technology trends and competitive landscapes. But this patent platform is fee-based. We are not currently able to disclose our data. However, we remain committed to the practice of open science and to providing as much detail as possible about the sources and methods used in our research.

Acknowledgments

This work was supported by the National Natural Science Foundation of China and the National Laboratory Center for Library and Information Science in Wuhan University.

Author contributions

Ying Huang: Conceptualization, funding acquisition, methodology, writing-original draft, and writing-review & editing; Yifei Yu: Conceptualization, data curation, methodology, writing-original draft, and writing-review & editing; Jia Yuan: Data curation, methodology, and writing-review & editing; Lin Zhang: Conceptualization, funding acquisition, methodology, and writing-review & editing

Competing interests

No competing interests.

Funding information

This work was supported by the National Natural Science Foundation of China (grant no. 72004169, 71974150).

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