The Value of Latent Patents

2026, Paper: "Analyzing over 47 million USPTO patent citation pairs for patents granted between 1976 and 2020, we find that specific patents rise to prominence only after considerable time has passed. Further, there are key sets of agents who consistently identify and adopt them. Although initially latent, these late-bloomer patents have significantly more influence on average than early-recognized patents. Early detectors and adopters of these late-bloomer patents amass significant positive value. Their adoption of these late-bloomer patents is associated with a 5.7% rise in sales growth (t = 3.07), a 1.5% in crease in Tobin’s Q (t = 2.56), and a 3.4% increase in new product offerings (t = 2.10). To establish causality, we implement an instrumental variable approach exploiting in ventor mobility following neighboring firm bankruptcies. This quasi-random variation in local inventor capacity confirms that these benefits are causally due to late-bloomer patent adoption by these firms. Consistent with incentive compatibility and realized cost dynamics, late-bloomer patents are closer to the core technology of the adopting f irm while being more peripheral to the initial patent writer, and are in less competitive spaces. In sum, we provide new evidence for the importance of late-adopter firms for understanding the value from latent innovation."