Innovation and Appropriability: Revisiting the Role of Intellectual Property

We exploit a new US Census survey of R&D to revisit an old but important question in innovation: how do US firms use intellectual property (IP) protection? The study presents a set of stylized facts that can have important implications for our understanding of the economics of innovation. The key findings are the following. First, while patenting firms are relatively uncommon in the economy, they account for an overwhelming share of R&D spending. Second, utility patents are considered less important than other forms of IP protection, like trade secrets, trademarks, and copyrights. Third, industry differences explain a great deal of the level of firms' engagement with IP, with high-tech firms on average being more active on all forms of IP. Fourth, we do not find any significant difference in the use of IP strategies across firms at different points of their life cycle. Lastly, unlike age, firms of different size appear to manage IP significantly differently. On average, larger firms tend to engage much more extensively in the protection of IP, and this pattern cannot be easily explained by differences in the type of R&D or innovation produced by a firm. We also discuss the implications of these findings for innovation research and policy.