Patent grants and implications for business

Case 8d: Patent grants and implications for business
Deli Yang, School of Business, Trinity University
Chris was an MA student in International Business and Management. After taking a module
entitled Intellectual Property (IP) in International Business (IB), he had taken great interest in
this subject and had been determined to do a good-quality research project. However, in the
first meeting with his supervisor, while feeling motivated, he realised that it was not enough
to be determined and he needed to make greater effort on his project. His supervisor pointed
out, based on his project proposal that he needed to be more focused and precise. The
supervisor had advised that the proposed focus of his research project – examining how
Western corporate managers view the development of IP in the Eastern European countries
using primary data – was too wide. He suggested narrowing it to assessing how IP systems
differ between Western and Eastern European countries and what these differences imply
for cross-border business activities, and only to use secondary data. The supervisor had
particularly mentioned that it would be sensible for Chris to use his statistical skills to draw
conclusions based on reliable secondary data commenting: ‘Western corporate managers’
views will involve primary data collection. It would be brilliant to do so, but given that you
have only three months to do the project, including writing up, it would be difficult to produce
a quality piece of work. There might be difficulties in collecting representative data due to
access issues, time constraints and financial support.’ At the end of the first meeting, Chris
and his supervisor agreed that Chris would undertake a project to assess the differences
between Western and Eastern European countries in terms of patent grants and the
implications for businesses.
Before the second meeting, Chris conducted a search of the literature regarding IP
system development particularly with the empirical focus on the EU countries. To his
surprise, there were only three articles that specifically examined the patent grant issues in a
comparative manner (Kotabe 1992a, b; Yang 2008). Both authors had used raw data from
the World IP Organisation (WIPO) database and conducted regression analyses on which
they based their conclusions. When reading the articles referenced in these three papers,
Chris found that they were suggesting theoretical reasons as to why France, Germany and
the United Kingdom (UK) had higher grant ratios for domestic than for foreign applications to
issue patent rights. These, he felt, could provide the justifications for questions for his
research project. At this stage, Chris was very eager to see his supervisor to report his
achievements. In the meeting, while the supervisor commended Chris’s progress in having
identified the appropriate literature, she also pointed out: ‘The most important work to do at
the literature review stage is to be able to critique on the existing work so that you can
identify research gaps for your own study.’ At the end of the meeting, Chris’s supervisor
asked him to establish precisely what secondary data he needed to obtain about patent
applications and grants for the countries he wanted to focus on.
Following this advice, Chris designed a table to highlight the key information. This
indicates the authors, research focus, empirical focus in relation to countries, data source
and analytical methods. Upon completion, his findings were clear. The existing literature had
not conducted grant ratio (grant lags) analysis with an empirical focus on any Eastern
European countries. Meanwhile, although Britain, France and Germany were compared and
contrasted with the Unite States by Kotabe (1992b), the conclusions were dated because
they were based on the data from the 1980s. A new study would enrich existing empirical
findings by not only adding new countries (Eastern Europe) but also revealing the changes
in Western Europe over the years in terms of grant ratios. In addition, through the studies,
similarities and differences between Eastern and Western Europe could be identified. This,
Chris felt, would allow him to make some recommendations relating to policy and business
implications. To collect his data, he logged on http:\www.wipo.org statistics, and
downloaded all the annual patent statistics available for all the EU countries.

With excitement, Chris presented his achievements proudly to his supervisor who was
pleased with his enthusiasm and his hard work. In the meantime, the supervisor also pointed
out that it was not enough to collect the data only. Chris also needed to justify why the
secondary data collected from WIPO were appropriate and what issues arose from the data.
Chris was surprised as he thought that data from a United Nations agency source like WIPO
would be ‘perfect’. The supervisor hinted to Chris that he had to look into the actual source
of the WIPO data, the standardisation process to compile the data, and how the data had
been categorised. He was advised to discuss possible weaknesses in the data in the
‘Methodology’ section of his project report. At the end of the meeting, Chris went home with
an important task: analyse the data and come to see the supervisor again with some
preliminary findings and understanding regarding how it had been collected.
Upon returning home, Chris sat at his computer for half an hour staring at the monitor.
There were 27 countries, and each country had at least 90-years’ worth of aggregate data.
The data for Germany was extremely complex due to it being subdivided into East and West
Germany prior to reunification. He spent another hour trying to understand the data before
he picked up the phone to call his supervisor for help. Chris was overwhelmed with the
richness of the data and did not know where to start. After discussion, the supervisor
suggested that he focus on a few countries instead of all EU countries, for example three
countries from Western Europe and three from Eastern Europe, and also only focus on the
Western German data.
Chris eventually finished his data analysis and submitted his project report. His great
effort did not disappoint his supervisor; the project was awarded a distinction. However, the
supervisor still commented that the discussion about the weakness of the data could be
more thoroughly presented.
Questions
1. Why does the supervisor advise that Chris do a project using secondary data rather
than collecting primary data?
2. What sources of information has Chris discovered through his search?
3. Do you find Chris’s justification for his research project convincing? Give reasons for
your answer?
4. Despite obtaining a distinction for the project, the supervisor commented that Chris
should have discussed the limitations of his data sources more thoroughly. Visit the
WIPO’s website [http://www.wipo.org] and make a note of precisely how the data
Chris used were compiled. Based upon this, how would you suggest Chris present
more thorough a discussion?
References and further reading
Kotabe, M. (1992a). A Comparative Study of U.S. and Japanese Patent Systems. Journal of
International Business Studies. Vol. 23, No. 1, pp. 147–168.
Kotabe, M. (1992b). The Impact of Foreign Patents on National Economy: A Case of the US,
Japan, Germany and Britain. Applied Economics. Vol. 24, pp.1335–1343.
Suthersanen, U. (2006). Utility Models and Innovation in Developing Countries, UNCTADICTSD: Geneva
Yang, D. (2008). Pendency and grant ratios on invention patents: A Comparative Study of
the US and China. Research Policy . Available at
http://dx.doi.org/10.1016/j.respol.2008.03.008 [Accessed 14 May 2008]