The link alone zeroes case---patent delays stifle growth and innovation---best studies.

The Economic Impact of Delay in the Patent Application Process

The aforementioned inefficiencies might delay the grant of a patent by creating additional requirements for applicants and patent examiners. A study recently conducted by Joan Farre Mensa and published by the United States Patent and Trademark Office (USPTO) found that “delays in the patent examination process significantly reduce firm growth, job creation, and innovation, even when a firm’s patent application is eventually approved.” The study looked at 45,819 first time patent applications filed since 2001 at the USPTO by U.S. startup firms in the pharmaceutical, bio-chemical, and other industries. For data, the study used USPTO’s internal databases, which have detailed review histories for all patent applications, and a variety of financial databases containing employment, sales, funding, and growth data for the subject firms. Using a regression analysis, Farre Mensa’s study analyzed the effect of patent review delays on firm growth.

Farre-Mensa, Fig. 4, reproduced below, is illustrative:

Figure 4. The Effect of Patent Review Delays on Firm Growth.

This figure plots the estimated effect of a year’s delay in reviewing a startup’s first patent application on the startup’s employment growth (Panel A) and sales growth (Panel B) over the five years following the first-action decision on the application. Specifically, the solid line shows the estimated review lag effect over horizons from one to five years after the first-action date, while the dashed lines show 95% confidence intervals.

Panel A. Employment growth.

Panel B. Sales growth.

Figure 4, Panel A, shows that for each year of delay in the patent application process, employment growth declined by 2.4% in the first year after a patent grant, and by 12.7% and 19.3% over three and five years, respectively. Figure 4, Panel B, shows that “[s]ales growth exhibits a similar negative post-decision trend,” with each year of delay causing sales growth to slump by 3.6%, 12.8%, and 28.4% over the one, three, and five years following the patent first action decision.

This study also found that each additional year it takes the USPTO to review an application reduces the startup’s subsequent probability of going public, by as much as a half. In fact, according to Farre Mensa, “[e]conomically, a two-year delay has the same negative impact on a startup’s growth and success as outright rejection of the patent application.”