What do Inventors Patent ? ∗

Legal disputes, such as the Blackberry case, suggest that patent rights may become vital to the economic survival of even the most successful innovations. Although it is obvious that inventors do not choose to patent all their innovations, what or why they patent is poorly understood. This paper introduces a new data set of more than 7,000 American and British innovations at three world’s fairs between 1851 and 1915 to examine the patenting decisions of inventors. Exhibition data offer many benefits: they include innovations with and without patents, cover innovations across industries and across countries, and provide measures of the quality of innovations. Such data suggest that technological characteristics – whether innovations can be reverse-engineered – are the key determinant of inventors’ patenting decisions. Across industries, shares of patented innovation range from 5 percent for metallurgy and 7 percent for chemicals to 30 percent for manufacturing machinery. In contrast, patenting rates are almost identical across rural and urban areas, across quality levels, and, perhaps most surprisingly, across patent systems. A comparison of chemical innovations over time reveals that patenting increased in response to improvements in scientific research tools which facilitated reverse-engineering.