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Patents are a key measure of innovation output, as patent indicators reflect the inventive performance of countries, regions, technologies, firms, etc. They are also used to track the level of diffusion of knowledge across technology areas, countries, sectors, firms, etc., and the level of internationalisation of innovative activities. Patent indicators can serve to measure the output of R&D, its productivity, structure and the development of a specific technology/industry. The relationship between patents as an intermediate output resulting from R&D inputs has been investigated extensively. Patents are often interpreted as an output indicator; however, they could also be viewed as an input indicator, as patents are used as a source of information by subsequent inventors. Like any other indicator, patent indicators have many advantages and disadvantages. The advantages of patent indicators are : patents have a close link to invention; patents cover a broad range of technologies on which there are sometimes few other sources of data; the contents of patent documents are a rich source of information (on the applicant, inventor, technology category, claims, etc.); and patent data are readily available from patent offices. However, patents are subject to certain drawbacks: the value distribution of patents is skewed as many patents have no industrial application (and hence are of little value to society) whereas a few are of substantial value; many inventions are not patented because they are not patentable or inventors may protect the inventions using other methods, such as secrecy, lead time, etc.; the propensity to patent differs across countries and industries; differences in patent regulations make it difficult to compare counts across countries; and changes in patent law over the years make it difficult to analyse trends over time.
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