This paper addresses the pattern of knowledge flows as indicated by patent citations between European regions. Our findings support the hypothesis that there are important barriers to knowledge flows in Europe. Patent citations occur more often between regions which belong to the same country and which are in geographical proximity. Furthermore, patent citations are industry specific and occur most often between regions that are specialised in industrial sectors with specific technological linkages between them. Patent citations are also more frequent when the citing region belongs to the same linguistic group as the cited region.

What is the impact of patent citations on patent renewal behaviour? Patent citations are commonly used as an indicator of technology spillovers. For cited patents, therefore, patent citations have a potentially ambiguous impact. On the one hand, patent citations may indicate a scientific breakthrough, a high value of the cited patent and therefore a long survival period. On the other hand, patent citations may indicate competing innovations that render the cited patent obsolete. By discriminating patents by technology field, it is demonstrated that patents that receive citations across technology fields survive longer than other patents. Patents that receive citations within the same technology field lapse earlier.Technology spillovers, Patent data, Patent renewal data, Patent citations,

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Inventors generally know more about their inventions than what is written down in patent applications. Because they possess this tacit knowledge, inventors may need to play an active role when patents are commercialized. We build on Arora (1995) and model firm-inventor cooperation in the commercialization of a given invention. Tacit knowledge warrants inventor activity. However, imperfect IPRs may reduce inventors' incentives to engage in the commercialization process. We analyze when first-best inventor activity is achieved in a two-stage contract. In the empirical part, we analyze when inventor activity is important for the successful commercialization of patents by using a detailed patent database. The database contains unique information on inventor activity, patent commercialization modes and the profitability of commercialization. In the empirical estimations, we find that inventor activity has a strong positive correlation with profitability when a patent is sold or licensed to another firm. When a patent is sold or licensed in the second phase, it is still inventor activity in the first phase that matters for profitability. Thus, our interpretation is that tacit knowledge and close cooperation between inventors and external firms are often crucial for the successful commercialization of patents. ____________________ The authors would also like to thank the participants at the EPIP conference in Oxford and the 8th ZEW Conference on the Economics of Innovation and Patenting in Mannheim for helpful comments on earlier versions of the paper. Roger Svensson gratefully acknowledges financial support from the Marianne and Marcus Wallenberg Foundation.