Understanding Innovative Firms : An Exploration of the Use of USPTO Data to Identify Innovative Firms in Small and Medium Sized Economies

The limitations of using patent data as a measure of technological innovation have long been known (Griliches, 1990). Despite this, patent data are frequently used in this way, providing potentially misleading analyses for policy makers. Kingston and Scally (2006) have shown that, for countries outside the NAFTA region, USPTO small enterprise data can provide a potentially more valid means of identifying genuine innovative activity in small and medium sized economies. This exploratory analysis investigates whether the Kingston/Scally analysis can be extended from inventors to assignee firms and considers the challenges of making this conversion. It also explores whether such a data series can be used to develop a typology of innovating firms which can be of interest for research and policy analysis purposes. Using granted patent data from the USPTO BIB series from 1969 to 2010 for Australian inventors are used to identify patents granted to firms. Converting the data to a set based on the residence of the firm owning the patent is tedious but not difficult. Nonetheless given the importance for policy purposes of focusing on innovative firms, it would be very useful if the USPTO were to include the assignee residence as a key variable in its datasets. More challenging, of course, is trying to ensure identification of all patents owned by any one firm. Typographical errors, keying errors and name changes make this a particularly tedious issue. It would be helpful if patent offices were to require (and use) a firm’s company number as the principle identifier for data on a patent. In addition there are problems arising from changes in firm ownership and how these should be treated. Three principal groupings of firms stand out – those which patent only once (the large majority); Silverbrook, with a portfolio of thousands of US patents; and some 400 firms with at least several US patents granted since 1995. A discussion of those firms with significant US patent holdings shows a variety of types of innovation leadership