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Innovation is crucial for the development and deployment of technologies. A widely
deployed model to understand technology builds on the concept of the technology life
cycle. The life cycle of technologies can be divided into a number of steps – from
invention, through RD&D and market development, to commercial diffusion. Different
processes can be discerned at each stage of the life cycle and different instruments can
be deployed to promote innovation.One group of such instruments relates to IPR. IPR
refers broadly to the ownership of intellectual findings in the industrial, scientific,
literary and artistic fields. IPR grants inventors certain exclusive rights over their
creations to encourage creative activity for the benefit of society by allowing the
inventors a fair return on their investments.

Patents can play a prominent role in the entire technology life cycle, from initial RD&D to
the market introduction (demonstration to diffusion) stages, where competitive
technologies can be protected with patents and licensed out to third parties to expand
financial opportunity. World Intellectual Property Indicators reported that in 2011, the
total number of patent filings worldwide exceeded 2 million for the first time, with a
growth rate of 7.8% over 2010 (WIPO, 2012)1.

The results from the econometric analysis indicate that various characteristics of the
innovation, the market, and the innovating firm have a significant effect on the
propensity to patent. First, the estimation results suggest that larger, i.e. more novel and
significant, innovations are patented more frequently than smaller ones. Second,
technologically very complex innovations appear to be patented less often than others,
while the fragmentation of intellectual property rights to cumulatively developing
technology seems to entail high propensities to patent. Third, the results indicate that
the propensity to patent varies across technology classes and declines with product
market competition. Fourth, collaboration with scientific institutions appears to have a
positive impact on the propensity to patent, while the estimations fail to produce
evidence that public R&D support or collaboration with other types of partners would
affect the propensity to patent. Finally, there appears to be a U-shaped relationship
between firm size and the propensity to patent, which can be attributed to a relatively
large extent to economies of scale in the patenting activity as well as to the relatively
important role of patenting in start-up ventures.