Measuring the Quality of Inventions in Latin America

When creating innovations, it is not a case of anything goes, and companies know it. Corporations are the first to be interested in having quality technology portfolios that will help them generate a competitive advantage with their products or services. Knowing the quality of these corporations' patents can be crucial for maintaining their competitiveness. Additionally, knowing the quality of patents at the national level can be essential for evaluating the technological development of Science, Technology, and Innovation Systems.

Our knowledge of the quality of Latin American patents has been only partial or even incomplete for many years. Nevertheless, patents are the most widely used indicator to determine a country's technological development, in other words, to measure the innovation generated. In fact, inventions are decisive in driving innovation and technology transfer, but logically, they need to be of high quality to add value to companies and the economy.

To date, developing countries—such as those in Latin America—have prioritized quantity over quality. As a result, their public policies are frequently designed to increase the patented number of inventions regardless of their technical characteristics. However, countries cannot simply display the total number of registered patents to measure the real value generated by patents in their innovation systems.

In order to fill this gap in Latin America, the first Quality Index for Latin-American patents has been published, developed together with my fellow researchers, Sergio Cuéllar (Pontificia Universidad Javeriana, Colombia), Milton M. Herrera (Universidad Militar Nueva Granada, Colombia), and Jorge Mejía (Central University, Colombia).

How can the quality of patents be measured at the national level?

Defining a good quality patent is not easy. However, we can measure some of its attributes to determine its quality. For example, three relevant areas have been identified in the scientific literature: legal quality (for example, the possibility that patent holders have to defend their rights in a lawsuit), technical quality (the degree of novelty of the invention and its relevance), and economic quality (market value and renewals of patent rights, among other aspects).

However, the distinction between these categories is not sufficiently clear to determine the quality of a patent, especially at the national level. The literature describes other indicators that, as a whole, can weigh the total quality of a patent more accurately:

• Backward citations: This is one of the most relevant indicators since it delimits previous knowledge of the technology under protection, revealing all previous inventions on which the patent is required. A more significant number of these citations may show that the technological development behind the patent is more robust.
• Forward citations: They comprise the number of patents that cite a precedent patent. The fact that patents receive citations even years after they are issued shows how current technologies are founded on previous inventions. As with research articles, a higher number of citations received implies a higher patent quality.
• Patent claims: They define the patent's boundaries by determining the set of requests that the applicant claims to the patent authority to be protected. The more claims on a patent, the greater the protection against potential offenders. Therefore, if the scope of the protection is broad, the economic value and quality of the patent will increase.
• Patent family: Patents are rights granted to an invention in a specific territory. If patent holders want to expand their territorial scope, they must protect the same technological concept in other countries. The patent family consists of the same invention protected in several countries, anticipating an idea about its expected economic value.
• Patent scope: Whether in the number of patent classes, the number of words included on claims, or even the number of claims, experts agree that scope is essential since if an inventor can extend the breadth of the patent protection, its future economic value will increase.
• The number of inventors: Some experts use this measure because it gives an idea of the level of investment in R&D (research and development) behind an invention, given the large portion of the budget allocated to human capital.
• Patent oppositions: Finally, another way of measuring the economic quality of a patent is the number of oppositions to the registration of a patent. If an inventor perceives that a new patent could threaten its future economic benefits, it can elevate an opposition against that document. It is logical to think that if the opponent incurs opposition process costs, it is because there is a significant market for that invention, and, therefore, the economic value of the patent is assumed to be high.

Latin-American patent ranking

We used a sample of 28,998 patent families to generate our patent quality index, estimating over 21,000 individual indicators. Considering Latin America's systemic lack of information, the index was calculated by measuring seven patent quality variables, including forward citations, number of inventors, and internationalization. In addition, we created eight individual indices for different scientific fields, which generate the Quality Index for Latin American Patents, where the maximum score is seven. This score would be obtained if a country ranked first in each technological field studied. We covered seventeen countries in the region and a 20-year timespan (1997 - 2016).

Our results show that countries such as Mexico, Brazil, Chile, Argentina, Panama, and Cuba occupy the first positions in the rankings for most of the years calculated. However, it can be observed that Mexico plays a relevant role in the region's patents and has occupied the top position of the total ranking for nine of the twenty years of study. Moreover, since 2000 the country has never dropped below third place out of the seventeen countries for which it is calculated (see graph).

Similarly, Mexico stands out in first place in the mechanical engineering ranking, with the highest figures for 2016 in terms of technical scope, technical quality, and use of top knowledge. This illustrates how Mexico has positioned itself as a benchmark for engineering over the past few years and for overall technological development in the Latin American context.

Another result to consider is the low technical relevance of Latin American patents in all the rankings, measure based on forward citations. This shows the poor quality of patents in the region when compared to the international context. In general, at the global level, Latin American inventions are not considered to be relevant for generating new technologies. Therefore, a substantial collective effort is needed to improve the relevance of Latin America's technological developments globally; cooperation is probably the best way to close this gap.

The author is a professor in the Department of Finance and Business Economics at EGADE Business School.