Texas Instruments secured an influential patent in 1991, but the so-called graphical processing unit (GPU) didn’t become noteworthy until 15 years later when Nvidia built its gaming and artificial intelligence portfolio on the computing technology.
Researchers point to patent No. 5,025,407 to illustrate how dormant inventions can propel innovation long after their introduction.
Harvard Business School Professor Lauren Cohen analyzed millions of patents granted by the US Patent and Trademark Office and concluded that US patent No. 5,025,407 isn’t an isolated case. In the working paper “Patent Hunters,” Cohen and his coauthors note that these late-bloomer patents can be as valuable, or even more, than patents with early success.
Cohen, the L.E. Simmons Professor of Business Administration in the Finance and Entrepreneurial Management Units, found that key players, like Nvidia, tend to awaken these “sleeping beauty” patents.
Companies generating late-blooming patents tend to be more established, with sizable research and development (R&D) budgets. On the other hand, patent hunters tend to generate significantly more new products per patent, and those products are more likely to serve consumers directly.
“There are critical agents in the innovation chain who search out (‘hunt’) these neglected and overlooked ideas and use them as critical inputs in their innovation and commercialization process,” the authors write.
When patent hunters find and develop these dormant late-blooming patents, they can reap many benefits. The study found that patent hunting was associated with higher future sales, firm value—as measured by “Tobin’s Q” or a firm’s market value divided by its replacement cost—and an expansion in new products launched.
Cohen teamed up with Umit Gurun, a professor at the University of Texas at Dallas; Katie Moon, an assistant professor at the Leeds School of Business, University of Colorado Boulder; and Paula Suh, an assistant professor at the University of Georgia.
The team determined that the technology of neglected, late-blooming patents is generally closer to those of patent-hunting firms and face less competition. These are some examples:
Image by HBSWK with asset from AdobeStock/Rohane
