IP governance and patent renewal decisions: Evidence from U.S. public firms

Which patents do firms allow to lapse, and who governs the decision? A U.S. patent remains in force only if its owner pays three scheduled maintenance fees. Many patents lapse; renewal records show which, but not how the choice is made. We hand-collect the IP-governance structures (board-level IP committees and dedicated IP officers) of all 7,735 patent-holding U.S. public firms over 1985–2019. Linking these to patent market values (Kogan et al. 2017) and USPTO maintenance-fee records, we measure how closely each firm’s lapse decisions align with the market’s valuation. We document five stylized facts. First, lapsing is pervasive: 41 percent of firms let at least one patent lapse. Second, alignment varies widely: the lapsed patents’ average value rank is the 59th percentile, with a standard deviation of 24 percentile points across firm-years. Third, formal IP governance is rare: 2.4 percent of firms have an IP committee. Fourth, committee firms’ lapse decisions come closest to the market’s ranking: their lapsed patents average the 51st percentile of value, against the 59th for other firms. Fifth, the association is concentrated in the committee form rather than in an officer title. Within firms, better-aligned years are followed by higher market value and investment. The facts mark patent renewal as a common, widely varying, and largely ungoverned margin of intangible-asset management.