OT Are Patents the Measure of Innovation? May 4, 2007, 2:35PM EST Maybe not, since the number of patents filed by a company doesn't give a full picture of its creative prowess. But analyzing citations produces some interesting of patents filed by a company results
by Jena McGregor
How do you measure a company's ability to innovate? One metric that might seem logical, given their traditional association with invention, would be patents—the number of them that a company holds.
But patents are a tough metric to use for innovation. Adding up the number of patent holdings, for a variety of reasons, can be a flawed way to get a good picture of a company's innovation prowess. While they're helpful indicators in some industries, such as chemicals or pharmaceuticals, they don't offer a broad enough assessment of the pioneering business processes or unconventional strategies in less product-focused industries, such as retail.
As the number of patents protecting incremental advances has proliferated—a trend which should slow following the Apr. 30 U.S. Supreme Court decision that raised the bar on obtaining patents—they have become even less of a benchmark for breakthroughs. At many high-tech companies, where innovation cycles move at sound-barrier speeds, patenting has become more of a defensive strategy than a way of cataloging creative output.
etc.
But patent citations aren't a perfect measure, either. The correlation between citations and stock market value is somewhat limited, says Bessen. And patent citations can be misleading, too...
...In fact, Patent & Trademark Office data show that about one-third of all patents with 20 or more citations are allowed by their owners to lapse, meaning they don't think they're worth the renewal fees. As for whether patent citations can capture innovation, Bessen says: "You're talking about a very rough indicator."
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