Trademark and patent applications are structurally near-identical and cointegrated: Implications for studies in innovation

Abstract

Objective. This paper seeks to test the existence of a “long-run” equilibrium (LRE) dynamic between trademarks and patents, as it would suggest that similar exogenous pressures concomitantly drive these metrics. The restraint in the divergence of the two indices supports an important aspect of the Innovation Agenda, a normative intellectual property (IP)-centric model of the firm, whereby the corporate strategy of science and technology firms is defined by constructing and communicating IP. Design/Methodology/Approach. Empirical analysis using descriptive statistics, wavelet, cointegration, and structural break analysis is applied to monthly US trademark and patent applications from 1977-2016 to test the potential for LRE. Results/Discussion. This work finds that the indices have similar (identical) structural attributes (including distribution characteristics, seasonal variation, and short-term cross-periodicity) and are cointegrated (I(1)). Further, structural breakpoints were (near) simultaneous (Trademarks: 1987, 1993, 1999, 2005, 2011; Patents: 1988, 1994, 2000, and 2011). A discussion of potential triggers causing these breaks and the concept of equilibrium in the context of these proxy measures is presented. Conclusions. From the study, likely, US trademark and patent applications are intimately linked; thus, increasing the likelihood that the Innovation Agenda may correctly capture at least one aspect of the firm. As a corollary, this work further supports the inclusion of trademark analysis in innovation studies. The limitations of the approach including study design are presented. Originality/Value. To the author’s knowledge, the existence of an LRE of trademarks and patents in the framework of the Innovation Agenda is a novel contribution.