On the other hand, all types of firms, not just existing players in the patenting arena, contributed to the increase in patenting. In fact, the share of patents going to small firms and the share going to firms with few previous patents have both increased in recent years (Jaffe, 2000). Likewise, the share of patents issued to universities and government laboratories increased in the 1980s and 1990s. University patents per dollar of research spending more than tripled from 1980 to 1997; the patent propensity of federal laboratories was on a similar course until 1993, when R&D spending in areas other than health started to decline.

Since the 1980s patent holders have been required to pay maintenance fees at the end of the third year, seventh year, and eleventh year to continue to be able to enforce their patents. A large majority of patents are renewed at the first stage, but nearly one-half are allowed to expire at the second stage, and up to two-thirds lapse at the end of the third stage. Nevertheless, the proportion of patents that are renewed has been increasing at all stages in recent years (see Table 2-1).

Unfortunately, there are no aggregate data on patent-related licensing transactions although a few firms have reported rapid growth in licensing revenue, depending on business cycle conditions. IBM’s licensing revenue peaked at more than $1.6 billion in 2000 (Berman, 2002). Lucent Technologies’ patent portfolio yielded $500 million in 2000.¹⁹ Texas Instruments has pursued a litigation-based strategy. Patented technology is increasingly perceived as having more strategic importance than previously as reflected in the creation of intellectual property practices by nearly all large consulting firms, the emergence of specialized firms that analyze clients’ patent holdings and counsel them on using patent portfolios to obtain licensing revenue, the advent of venture-backed firms that purchase unexploited patents and assert them, the use of patent information to pinpoint strategic trends and stock investment opportunities, and the appearance of business management commentary on the importance of a firm’s identifying lucrative licensing prospects among its latent patents (Rivette and Kline, 2000). This is, of course, consistent with the frequent observation that many forms of intangible assets—workforce caliber, R&D, brands, and distinctive competences as well as