Will renewal fee reduction introduce low-quality patents? Evidence from patents endorsed LOR in the UK

Li-Ming Li, Chun-Yu Zhang and Ya-Feng Zhang

Economics of Innovation and New Technology, 2024, vol. 33, issue 3, 363-379

Abstract: Considering the trade-off between cost-saving and commitment to a non-exclusive license, we use a dataset of the patents endorsed license of right (LOR) in the UK from 2004 to 2022 and apply the propensity score matching (PSM) method to examine whether the LOR system’s renewal fee reduction will introduce low-quality patents. The results suggest that the renewal fee reduction leads to an increase of 1.89 years to the average age of patents endorsed LOR. Furthermore, the LOR system has a limited attraction to high-quality patents for both institution-preference enterprises and institution-prudent enterprises. The findings are robust to several empirical checks. The theoretical and practical implications of the results are discussed.

Date: 2024
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DOI: 10.1080/10438599.2023.2185614

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