اثر حفاظت از ثبت اختراعات بر ارزش بازار شرکت: مورد بخش انرژی تجدید پذیر  The effect of patent protection on firms’ market value: The case of the renewable energy sector

1. Introduction In the renewable energy industry, as in other high-tech industries, protection of a company’s intellectual property substantially determines the company’s success. In particular, developing technology in renewable energy requires a large investment by firms and takes a long time [1,2]. Thus if technology rights are nullified or other companies can easily imitate technology in the sector, the corresponding losses can be great, and firms would find it difficult to recover their investment in it [49]. In addition, recent patent litigation among renewable energy companies has increased, and companies whose patent lawsuits fail have suffered severe losses. For example, GE (General Electric) sued Mitsubishi Heavy Industries, alleging that it had infringed GE’s wind turbine patent. The court ruled in favor of GE and ordered Mitsubishi to pay GE $170 million in penalties. Afterward, Mitsubishi Heavy Industries’ stock price fell almost 7.3%. Thus protecting patents became an increasingly important issue in maintaining a company’s value in the renewable energy industry. However, little previous research examines the issue of patent protection and its effect on renewable energy firms. Rather, most of the previous literature on renewable energy focuses on technology transfer, network analysis, and public policy, using patent characteristics. For example, one research stream on renewable energy examines the relationship between the patent system and technology transfer in green energy [3]. Other literature uses patent network analysis to study organic photovoltaic cells in renewable energy [4]. In this study, we examine how patent protection affects firms’ market value in renewable energy industry. In other words, we examine the effect of two important measures of patent protection—backward citation and the size of patent families—on firms’ market value. Backward citation can be measured by the extent to which firms’ patents are protected from invalidation suits because patents that do not cite previous knowledge are more likely to be subject to patent invalidation suits than those that do not [5]. Patent owners can file their patents in different countries to protect inventions via patent families [6]. Therefore, the number of patent families per company can be a proxy for the company’s capacity to protect the patents it holds. We estimate an empirical model that captures the relationship between firms’ patent protection and market value by using panel data on 197 firms in the South Korean renewable energy industry from 1980 to 2014. Our analysis shows that the number of backward citations and the size of patent families significantly affect a firm’s market value in the renewable energy industry. In other words, a firm’s degree of patent protection significantly enhances the financial fortunes of renewable energy.