A new study (entitled “Innovation Worth Buying: The Fair-Value of Innovation Benchmarks and Proxies”) by two assistant Professors of Accountancy at the George Washington University, James Potepa and Kyle T. Welch has benchmarked the most common measures of outputs and outcomes of innovation (including patent count, citation-weighted patent count, R&D expenditure, trade mark count and market response to new patents).
The report authors have reportedly concluded that the size of a company’s trade mark portfolio rather than either patent count or R&D expenditure is a more consistent indicator of innovation with trade marks being positively and significantly associated with innovation. Although this conclusion may be surprising the authors explain their findings as follows:
- firms may not file patent applications for fear of their inventions being revealed to competitors and therefore rely on Trade Secrets rather than patents to protect their inventions
- patents represents technology already developed
- trade marks are a combination of recognition and what customers anticipate the firm to develop in the future