Abstract
Over the last decade, public patent subsidies have played an important role in several countries in enhancing international filings by domestic companies, especially SMEs. In this paper, we first analyze patent subsidies implemented in Italy from 2002 to 2012 and classify them according to four different typologies, based on their rationale and objectives. We then use data from a sample of 222 patents subsidized by the Chamber of Commerce of Milan in Northern Italy, and a control group of non-subsidized patents, to assess the impact of patent subsidies on patent value and firms’ turnover growth. We conclude by discussing policy recommendations for the optimal design of patent subsidy schemes.
Liang Xu is Associate Professor at the Research Center for International Business and Economy in School of International Business of Sichuan International Studies University. She received a Ph.D. in Management at Chongqing University, China. She has been a Post-doctor researcher at University of Bologna, Italy. Her research interests are in the fields of technological innovation and strategic management.
Federico Munari is the author for correspondence. He is Professor of Technology and Innovation Management at the Department of Management of the University of Bologna. He was the Director of the Ph.D. Program in General Management of the University of Bologna. He is the author of several published articles and books on issues related to entrepreneurial finance, intellectual property management, technology transfer, and R&D management.
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- 1.
For instance, referring to subsidized patents in China, an article from The Economist (2014) states: “The quality of many of these patents is in doubt. Of the desired 2m filings, many will be for ‘utility’ or ‘design’ patents, which are less substantial than ‘invention’ patents. Critics suggest that even in the latter category, many Chinese filings fall short of global standards.”.
- 2.
See Annex I for a presentation of a selected set of policies centered on patent subsidies from various countries outside China.
- 3.
As mentioned above, such debate has been particularly centered on the experience of China, whose impressive growth in the number of patent filings over the last decade has been in part encouraged by a relevant program of patent subsidies administered by the central, provincial, and city governments (Lei et al. 2013). The fact that most Chinese patents over the period 2001–2008 were related to new design appearances or new models, thus not requiring great technical innovation, has been interpreted as a signal that public subsidies to cover patent application costs can artificially inflate the number of filings (Financial Times 2008; The Economist 2010).
- 4.
The eligibility criteria referred, for instance, to compliance with the EU definition of SME on the part of the applicant, and the compliance of incurred expenses with those specified in the call.
- 5.
In August 2011 the Italian Ministry of Economic Development launched an ambitious subsidy scheme with the objective of boosting the number of patent filings by SMEs and of their economic exploitation, allocating a budget of EUR 40 million to this measure. This is, however, too recent to be included in our assessment exercise, given that a significant time span is required to construct the patent quality measures we adopt in the analyses. In addition, information on patents subsidized through such policies is not publicly available.
- 6.
Patent applications for industrial inventions in Italy can be filed with the chamber of commerce or directly with the Italian patent and trademark office. In the former case, the chamber sends the documents received to the central office.
- 7.
Patent applications for industrial inventions in Italy can be filed with the chamber of commerce or directly with the Italian patent and trademark office. In the former case, the chamber sends the documents received to the central office.
- 8.
We did not collect information on domestic (Italian) patent applications, given that the website of the Italian IP Office (UIBM) did not allow the collection of information on forward citations.
- 9.
We use Recommendation 2003/361/EC, adopted by the European Commission, as a criterion here, categorizing micro enterprises as those with a turnover no greater than EUR 2 million, small enterprises as those with a turnover no greater than EUR 10 million, and medium-sized enterprises as those with a turnover no greater than EUR 50 million.
- 10.
We proceeded in the following way. First, we selected from the OECD Regpat database (a comprehensive database presenting patent data that have been linked to regions and provinces) all EP and PCT patents filed by applicants located in the province of Milan. We identified in this set of patents the patent with the nearest priority date. We used this patent as a control only if the company was included in the corresponding turnover category (micro, small, or medium). If this was not the case, we moved to the next patent with the nearest priority date, until we found a company in the same category of turnover level, and used such a patent as a control.
- 11.
Such formal checks typically regarded the following aspects: the nature of the participating company (i.e. correspondence with the EU definition of SME); the type of IP for which the grant was requested (i.e. correspondence with the eligible types of IP described in the call); and whether the expenses for which the company was requesting the grant corresponded with the eligible expenses described in the call.
- 12.
The strongest correlation levels regarded the variables Number of Inventors and Number of Applicants, and the variables PCT and Number of Applicants. We therefore decided not to include Number of Applicants as a control variable in our regression models.
- 13.
Poisson models and negative binomial models are typically used for count data. Poisson models assume that the conditional mean and variance of the distribution are equal. Given that forward citations data rarely satisfy this assumption, we decided to adopt a negative binomial regression model in our analyses. As a robustness check, we also tested the Poisson model, obtaining similar results.
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Appendices
Annex I
Example of public measures supporting the exploitation of patents in various countries
County/region | Funding scheme | Eligible costs relate to patenting | Agency responsible | Target company | Amount |
|---|---|---|---|---|---|
Spain | The Foreign Promotion Initiation Plan | Registration of patents and trademarks abroad, including the professional fees of an Industrial Property Agent | The Spanish Institute for Foreign Trade, and the Higher Council of Chambers of Commerce | Spanish SMEs | The subsidy of up to 80 % of the expenses, up to a maximum of €46,000 |
Canada | The Atlantic Innovation Fund | Patent searches and filing fees | The Atlantic Canada Opportunities Agency, a federal government agency in Canada | Private sector firms | Actual cost |
Ireland | R&D Fund | Costs of research, development and innovation projects in preceding the granting of the patent or other industrial property rights in Ireland and aboard | The government agency of Enterprise Ireland, coordinated by Department of Enterprise, Trade and Employment | Irish based companies, particularly SMEs | The maximum R&D grant of a company is €450,000, with the Patent costs no more than 20 % of the overall project cost |
Scotland, U.K. | The SMART, SPUR or SPURPLUS Grants | Essential project costs such as: labor, overheads, materials, subcontracting, consultancy and intellectual property | Scottish Executive Enterprise, Transport and Lifelong Learning Department of the Scottish Government | SMEs based in Scotland | 75, 35, 35 % of eligible costs, with maximum grant of €35,000, €52,000, €351,000 for SMART, SPUR and SPRURPLUS |
Wallonia, Belgium | Subsidy for Patent Registration and Extension | Patent application to national or European patent office with a search for previous patents; additional formalities and the extension to other territories | The Directorate General Operational for Economy, Employment and Research (DGO6) of the Ministry of the Walloon Region | Local SMEs | 35 and 70 % of the costs incurred of patenting an innovation and all cost incurred for national validation |
Gujarat, India | Patent Registration Assistance | Patent registration in India and abroad | Industries and Mines Department of the Government of Gujarat | Local small, medium and large company | 50 % (maximum Rs. 5.00 Lakhs) of necessary expenditure incurred for obtaining the patent |
Annex II
Example of public measures supporting the exploitation of patents in Italy
Name | Proof of Concept Network |
Established | 2012 |
Website | http://www.area.trieste.it/opencms/opencms/area/it/attivita/progetti_az/PoCN.html |
Funding agency | Ministry of University and Research, through Area Science Park |
Budget | EUR 1.974.000 (period 2012–2014) |
Type of measure | Measure promoting the maturation of patented inventions |
Description | The Proof of Concept Network (PoCN) is a pilot project funded by the Ministry of University and Research and managed by Area Science Park (a multi-sector science and technology park in Trieste), in collaboration with other Italian partners. The project aims to promote the commercial exploitation of the scientific research results of universities and public research organizations (PRO), through the validation and development of prototypes in collaboration with industry. In particular, PoCN involves the use of research results and patents available from universities for specific industrial activities through co-development with businesses in order to test their performance in real application contexts and generate prototypes of products/processes of practical interest to the company. The projects for industrial validation programs have a maximum term of nine months and are financially supported up to a maximum of EUR 30,000 |
Name | Fondo Brevetti Trentino Sviluppo (Patent Fund Trentino Sviluppo) |
Founded | 2006 |
Website | |
Responsible | Province of Trento, through the Innovation Agency Trentino Sviluppo |
Budget | EUR 120.000 (for year 2011). |
Type of measure | Measure promoting the commercialization of patented inventions |
Description | Fondo Brevetti Trentino Sviluppo was set up by the Province of Trento in Northern Italy through the Innovation Agency Trentino Sviluppo in order to promote business initiatives in the local area by exploiting the findings of research funded by the province. It is a financial instrument for valorizing and commercializing research results by encouraging technology transfer between the research world and business. Fondo Brevetti Trentino Sviluppo can acquire and assign intellectual property rights (patents, trade-marks, know-how, software, etc.) resulting from research projects developed by local bodies with provincial financing. Fondo Brevetti Trentino Sviluppo is responsible for protecting assigned rights and promoting them in order to support the birth of business initiatives that may derive a competitive advantage from those rights. If the exploitation in the Trentino area is not possible, the rights may be granted under license or transferred to third parties, even if they operate in markets other than Trentino. Up to 2012, the Fund had backed 15 patents and four trademarks related to seven different technologies developed by researchers from nine different research centres |
Name | Fondo Nazionale per l’Innovazione (National Innovation Fund) |
Established | 2011 |
Website | |
Funding agency | Ministry of Economic Development |
Budget | EUR 75 million (for both measures based on debt and equity financing) |
Type of measure | Measure promoting the financial leverage of patented inventions |
Description | The Ministry of Economic Development set up the National Innovation Fund, a tool for small and medium-sized enterprises, to support the development and financing of innovative projects based on the exploitation of patents and industrial designs. The ministry, through the fund, provides a guarantee that facilitates the granting of loans by selected banks in order to facilitate access to credit for small companies and reduce the costs of the loans. Funding is awarded up to a maximum amount of EUR 3 million per company, with a maturity of up to 10 years, and no real or personal guarantees are required of the company. Two banks, Mediocredito Italiano (group Intesa Sanpaolo) and Unicredit, have been selected to implement this initiative. A joint measure has been developed to provide risk capital to IP-rich new ventures, through a new seed fund jointly backed by the ministry and the VC firm Innogest |
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Xu, L., Munari, F. (2016). The Impact of Public Support for SMEs’ Patenting Activity: Empirical Evidence from Italy. In: Prud’homme, D., Song, H. (eds) Economic Impacts of Intellectual Property-Conditioned Government Incentives. Springer, Singapore. https://doi.org/10.1007/978-981-10-1119-1_4
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