ABSTRACT
This chapter considers whether there is a correlation between patent grants and an increase in economic activity and the extent to which the law facilitates the effective use of patents by owners/originators as economic assets to secure loans made by third party financiers. It describes the signal function of patenting activity is important and discusses the patent grant in terms of providing a mechanism for imparting credible information about a firm, especially to third party financiers. Patents are registrable intellectual property rights which provide a legal framework to encourage and protect innovation in return for transferring information. The chapter examines the extent to which especially technology-driven small and medium sized enterprises can use patents as security. Patents are dichotomous because their static and dynamic effects are very different. The impact of patent grants on Research and Development, or more generally on economic growth has been considered at both the macro and micro economic levels.
