Page 18 - IDEA Study 8 2017 Direct subsidies and R&D output in firms

The analysis is focused on R&D output in terms of applications for patents of invention and utility models, which, taken together, we refer to as applications for IP protection. The main variables of our interest are the dummy for applying for IP protection domestically at the Industrial Property Office of the Czech Republic (direct applications and international applications entering national phase) and the dummy for applying for IP protection internationally (to one of four major patent offices: i) the US - USPTO; ii) Europe – EPO (filed under the European Patent Convention); iii) Japan - JPO; and iv) International Bureau of the WIPO (filed under Patent Cooperation Treaty). 2013 is the latest year for which complete data on IP protection applications is available in the PATSTAT database (Spring 2016 edition), due to delays in the publication process. First, there is a delay between filing and publishing of patent applications. In most countries, patent applications are only published 18 months after their earliest priority date, before which the application remains confidential to the patent office (EPO 2016b). Second, there is a lag of at least 6 months between a patent application being published and appearing in the PATSTAT database. As a result, the IP protection data are incomplete for projects that ended after 2013 or are still running, and thus must be in these cases used with caution.9 Admittedly, there are other relevant R&D outputs that ideally should be taken into account, such as non-patented (or even non-patentable) technologies with elements of tacit knowledge, innovated products introduced to the market and process innovations implemented in practice. Nevertheless, a major advantage of using theformal IP protection instruments is that the data rely on a clear definition based on an external review process, which makes them free of subjective assessment by the firms themselves and that these indicators have been widely used in the literature. Even more importantly, the formal IP protection instruments are the only types of R&D output that were acknowledged as eligible project results by the subsidy programmes, as stipulated in the national evaluation methodology (CRDI 2013), for which harmonized micro data is readily available both for the subsidy programme participants and the control group of non-participating firms. In other words, this is the only data on the basis of which a quantitative counterfactual evaluation of output additionality is possible. In each call for proposals, a given firm could participate in one or several projects, as the main recipient or as part of a consortium, and could apply to receive money from 9 As also emphasized below, this is a particular concern for the fourth call of TIP and the second and third calls of ALFA. 16