Patents as indicators of R&D internationalization

Abstract This paper examines the reliability and validity of the common practices of (1) identifying the geographical location of inventions by the address of the first-listed inventor in patent applications, and (2) making comparisons between U.S. and non-U.S. MNEs based on USPTO patent records. The first inventor criterion is problematic when co-inventors reside in different countries, since there is no convincing evidence that the address of the first one reliably indicates where the work underlying the invention took place. Comparing USPTO patenting activities of U.S. and foreign firms is problematic, because propensities to patent domestically are higher than doing so abroad. Domestic patents therefore include a higher share of inventions with low or very uncertain economic value than do ones filed by foreign companies. The analyses presented are based on two sets of empirical data, (1) USPTO pharmaceutical patents for the years 2000–2015, and (2) results from a questionnaire survey directed to U.S. and UK patent attorneys. The results provide no support for the common assumption that the address of the first inventor is a reliable indicator of where the R&D underlying the invention was performed, although it can sometimes be a reasonable proxy. The results raise questions regarding the reliability and validity of the methods employed in much of the inherited literature and suggest conclusions as to how best to employ patent data in research on international R&D.