We use textual analysis of firm patent and product filings to construct a novel measure of patent utilization rate, which reflects the extent to which a firm’s patents are applied in its new products. We validate the measure by showing that patents utilized in new products are more likely to belong to firms’ core technology fields, receive more self-citations, and are less likely to be sold, and that new products supported by more patents receive higher announcement returns and are more likely to be breakthrough innovations. Firms with higher patent utilization rate experience more active new product development, stronger market share growth, and higher profitability improvement and valuation. The effects are predominantly driven by the utilization of high-value patents, and are more pronounced for firms in competitive product markets. We address endogeneity concerns using a shift-share instrumental-variable approach and show robust findings. Our results highlight the costs of patent underutilization and the strategic importance of innovation commercialization.