| I study an inventor's decision to file for patent protection in each of an arbitrary set of countries, as a means of estimating the global value of patent rights, and the distribution from which patented inventions are drawn. I generalize the single-country deterministic patent renewal model introduced by Pakes and Schankerman (1984) in several respects: by treating the decision to file for patent protection as endogenous; by exploiting the common legal definition of an invention across countries to distinguish unobserved heterogeneity in invention quality from the value imparted by country-specific circumstances and policies; by generating estimates for countries, such as the United States, to which renewal models do not apply; and by estimating each country's global returns to patent protection. The result is a random-coefficient, multinomial probit model that can be applied to invention-level patent data. I estimate the model on a random sample drawn from the 18 countries that constitute the vast majority of the 1974 international patent cohort. The Monte Carlo simulation results are consistent with those of patent renewal models, except in the right tail of the distribution, where the international model imputes significantly more value (up to {dollar}50 million worldwide) to the most valuable inventions. I estimate that the international component of annual capitalized patent returns alone represents over {dollar}14 billion in 1974 dollars, or about 21% of annual private business R&D in the countries under investigation. The average internationally protected patented invention generates about {dollar}245,000 in patent rights, with over half the total value captured by the top 5% of inventions. At least in this sample, the largest developed countries appear to grant more value in patent rights at home than they hold abroad; as in so many other areas, Japan is an exception, showing a large "trade surplus" in patent rights. |
