United States Small Business Administration
Office of Advocacy
RS 167
_______________________________________________________________________________________________

_______________________________________________________________________________________________

Purpose

The Office of Advocacy has a long-standing interest in questions about the burden small firms must bear to protect their intellectual property. The globalization of technology has made it even more necessary for small firms to have patent protection so that they will be able to finance research and development costs and still make a profit.

This research identified differences in foreign patenting by small and large firms. The objective was to determine whether small firms working in the same technological fields as large firms, with inventions of comparable value, are able to patent their inventions as broadly as large firms or are inhibited by resource constraints or other obstacles.

The findings of the research will be relevant to U.S. government policy and programs aimed at increasing exports and to international patent treaty negotiations.

Scope and Methodology

To compare foreign patenting practices of small and large businesses, a data set of matched pairs of small and large business patents was constructed. All U.S. patents issued to small firms in 1988 were matched to randomly selected large business patents in the same technology field issued on or about the same date. Patents were selected from two lists supplied by the United States Patent and Trademark Office. Searches of other public data bases provided information regarding the patent. Information collected included the application date, issue date, title and abstract, the U.S. Patent Classification (USPC), the International Patent Classification, and references to earlier patents. The result was a final set of 2,751 matching pairs of U.S. small and large business patent families.

The number of countries in which protection was sought for an invention was measured by a variable called "patent family size" and was calculated by counting the number of countries represented by patent applications and awards in the family.

The number of times any particular patent was cited in applications for other patents was used to assess the value of each patent.

The USPC classification system has 400 categories; for this study, all patents were aggregated into 13 broad technology areas. Standard statistical techniques were used to identify statistically significant findings. The researchers also interviewed the principals in eight firms to explore the differences in foreign patenting behavior among small firms.

Highlights

• A larger proportion of the large business patent families than of the small business families is international, even when the field of technology is accounted for.
• More large firm than small firm patents are filed abroad.
• Small business patents and large business patents are about evenly cited among the most highly cited patents.
• Three factors seem to distinguish between small companies that do little foreign patenting and those that are very involved in foreign patenting: their focus on foreign markets, the size of their research and development (R&D) program, and their dependence on federal funding for R&D or procurement.

Ordering Information

The complete report is available from:

National Technical Information Service
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
(703) 487-4650
(703) 487-4639 (TDD)

Order number: PB96 162789

Price codes: A05/$21.50; A01/$10.00 Microf.
*Last Modified 6-11-01