The patent surge in the 1990s - during which the number of German patent applications at the European Patent Office more than doubled - was not accompanied by similar development in R&D expenditure. This calls for explanations. Whilst acknowledging that there have been several institutional changes that affect the "supply side " of patents, this paper concentrates on the changing demand patterns for patents from the perspective of companies. Using a sample of more than 500 German companies active in patenting and responsible for 40% of German patent applications as a basis, we first investigate changes in the importance of patents and alternative instruments to protect intellectual property. As a second step, we ask whether the patterns in reasons for patenting have changed. We found that in the last five years both formal patent protection and the role of informal protection strategies have become more important - especially for very large firms - whereas other formal IPRs have decreased in relative importance. Looking at motives for patenting, we observe several phenomena which may contribute to the explanation of the patent surge of the 1990s. First, the traditional motives to patent - protection from imitation or the exclusive use of intellectual property are still the most important and have become even more so. In addition, patents are increasingly used to secure the technological space to develop new products (defensive use), but also to actively block competitors in their development activities (offensive use). Second, patents are recognised as part of companies' intangible assets, and foster their reputation. Third, patents are assets in the trading of knowledge in the knowledge economy, as in cross-licensing agreements and patent pools. These aspects have great relevance for large and small companies. Fourth, patents serve as indicators for the performance of R&D departments, especially in large companies. Driven by increasing pressure to compete and to collaborate with other companies, the interplay of these rationales leads to increased patenting activity especially by the large companies, but also the small ones, and explains the breaking up of the direct relationship between R&D expenditures and patent applications.
