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Do Patent Assertion Entities Harm Innovation? Evidence from Patent Transfers in Europe

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  • Gianluca Orsatti
  • Valerio Sterzi

Abstract

The recent upsurge of patent litigation cases initiated by patent assertion entities (PAEs) in the U.S. has led to an intense debate about their effect on innovation performances and on the IP system functioning. We contribute to this debate by providing original evidence based on the patenting activity of PAEs in Europe, a region where the patent assertion landscape is growing rapidly and the imminent introduction of the Unified Patent Court and the Unitary Patent will upset the current schemes. Relying on EPO (European Patent Office) data on patent transfers and patent citations, our results show that PAEs acquire patents with high average technological quality. They may thus increase liquidity in the patent market and enhance its efficiency. However, after a transfer occurs, patents transferred to PAEs receive significantly fewer citations. This suggests that producing companies whose business makes their technologies close to the ones acquired by PAEs may perceive an augmented risk of being sued. As a consequence, they reduce their innovative effort in fields populated by PAEs and this reflects into lower citations flowing towards PAEs’ acquired patents. These results are robust to different measures of citations considered and to different econometric techniques.

Suggested Citation

  • Gianluca Orsatti & Valerio Sterzi, 2018. "Do Patent Assertion Entities Harm Innovation? Evidence from Patent Transfers in Europe," Cahiers du GREThA (2007-2019) 2018-08, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
  • Handle: RePEc:grt:wpegrt:2018-08
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    More about this item

    Keywords

    Market for technology; Patent assertion entities; Patent trolls; Patent intermediaries; Patent citations; Innovation.;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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