TY - JOUR AU - Hall,Bronwyn H. AU - Thoma,Grid AU - Torrisi,Salvatore TI - The market value of patents and R&D: Evidence from European firms JF - National Bureau of Economic Research Working Paper Series VL - No. 13426 PY - 2007 Y2 - September 2007 UR - http://www.nber.org/papers/w13426 L1 - http://www.nber.org/papers/w13426.pdf N1 - Author contact info: Bronwyn H. Hall Dept. of Economics 549 Evans Hall UC Berkeley Berkeley, CA 94720-3880 Tel: 510/642-3878 Fax: 510/548-5561 E-Mail: bhhall@nber.org Grid Thoma School of Science and Technology University of Camerino, Italy Via Madonna delle Carceri, 9 62032 Camerino (MC) E-Mail: grid05@gmail.com Salvatore Torrisi Department of Management University of Bologna, Italy Via Capo di Lucca 34 - 40126 Bologna Tel: 011 39 051 2098061 Fax: 011 39 051 246411 E-Mail: torrisi@unibo.it AB - This paper provides novel empirical evidence on the private value of patents and R&D in European firms during the period 1991-2004. We explore the relationship between firm's stock market value, patents, and "quality"-weighted patents issued by the European Patent Office (EPO) and the US Patent and Trademark Office (USPTO). We find that Tobin's q is positively and significantly associated with R&D and patent stocks, but that only those patents taken out in both patent offices or at the USPTO alone seem to be valued. Either forward citations or a composite quality indicator based on forward citations, family size and the number of technical fields covered by the patent are modestly informative for value. Software patents account for a rising share of total patents in the USPTO and EPO. Moreover, some scholars of innovation and intellectual property rights argue that software and business methods patents on average are of poor quality and that these patents are applied for merely to build portfolios rather than for protection of real inventions. We found that such patents are considerably more valuable than ordinary patents, especially if they are taken out in the U.S. However their quality indicators are no more valuable than those of other patents, suggesting that their primary purpose may be to increase the size of the patent portfolio. ER -