Gaetan de Rassenfosse (EPFL)

An Empirical Analysis of Patent Office Delays and Market Entry Timing

Abstract. The timing of product market introduction is an important decision of a firm’s commercialization strategy. In the case of patent-protected innovative products, delays at the patent office may affect the timing. Indeed, it takes the USPTO about 3–5 years—sometimes much longer—to examine and issue patents. Launching a product before obtaining a formal notice of patent allowance exposes a firm to litigation risk. However, waiting for a patent grant may impose significant financial burdens on the firm due to delayed product launches, missed market opportunities, and incurred holding costs. We understand very little about how delays at the patent office affect product commercialization strategy. This paper investigates the effect of patent office delays on product market introduction using a unique linked patent-product dataset. Results from Instrumental Variable and Cox Proportional Hazards regression models suggest a sizeable effect. We find that a patent grant increases the hazard of commercialization by 44 percent.