Declared essential patents and average total R&D expenditures per patent family

Yanis Luca Gamarra and Gunther Friedl

Telecommunications Policy, 2023, vol. 47, issue 7

Abstract: The sharp increase in SEP declarations and declaring firms emphasizes the necessity for understanding firms’ innovation investment behavior in standardization. This paper empirically investigates whether declared standard-essential patents (SEPs) and the declaring firm’s business model (operationalized as a firm’s location in the value chain) are associated with a firm’s innovation investment behavior. To this end, we measure firms’ innovation investment behavior through average total research and development (R&D) expenditures per filed patent family for publicly listed firms from 1999 to 2018. Our sample mainly includes major SEP family declarants. We rely on a binary business model taxonomy differentiating upstream and downstream firms. Within that setting, total R&D expenditures rise with increasing fragmentation of declared SEP families, suggesting that firms adjust their R&D investments to declaration developments in standard-setting organizations (SSOs). We also show that upstream firms have significantly lower total R&D expenditures than downstream firms, which could indicate structural differences in their intellectual property (IP) and R&D management processes. Our results can help SSOs and regulators better understand firms’ innovation investment behavior.

Keywords: R&D; Patenting; Standardization; Standard-essential patents; Business models (search for similar items in EconPapers)
JEL-codes: L15 L96 O32 O34 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1016/j.telpol.2023.102575

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