Discuss the main drawbacks of patents as indicators of innovation output

1. Not all patents represent innovation, nor are all innovations patented 2. The value of patents is highly skewed, as there are a small number of highly valuable patents and a large number of patents with little value (Scherer and Harhoff (2000) showed that about 10% of the most valuable patents account for more than 80% of the value of all the patents) 3. A patent refers to a temporary property right on an invention, but not a guarantee to exclude others from making, using or selling the patented property. While the embodiment of the innovation is protected by the patent, the underlying idea is not. 4. Patents are only strong as their enforcement 5. They are indicator of invention rather than innovation; some types of technology are not patentable