This article investigates the effect of the Global Financial Crisis (GFC) of 2008 on ownership of patents and follow-on innovation after the GFC. The GFC raised uncertainty about economic prospects to crisis levels for the longest period since the 1930s. In response many firms reduced the size of their patent portfolios, with effects on competition and opportunities for follow-on innovation. We study why patents were not maintained, which patents were not maintained and which effects this had on subsequent patenting. Using data on corporate bonds issued by patent owners in the United States before the GFC we show that access to US corporate bond markets affected the decision to maintain patents during the GFC: Firms reduced the size of their patent portfolios if more of their rivals had had access to US corporate bond markets before the crisis. Citation data reveal that patents lapsing in 2009 received more citations over the following five years than patents lapsing in 2008, suggesting that follow-on innovation increased significantly as a result of firms being forced to drop patents during the GFC. This effect is more pronounced in discrete technology areas than in complex technology areas.
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