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Non-Practicing Entities and their patent acquisition activity in Europe

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This paper investigates the expansion of non-practicing entities (NPEs), a widely-discussed subject in both academic and public policy circles, particularly in the United States. There is a prevalent belief that Europe is less exposed to NPEs due to a robust patent system, increased enforcement costs, and smaller damage awards. However, by using a newly compiled database of NPE patent applications at the European Patent Office (EPO), this study reveals a growing presence of NPE activity in Europe, with ownership of nearly 20,000 EPO patents, predominantly in the field of Electrical Engineering. Furthermore, the paper contributes to the existing literature by examining the heterogeneity of the NPE business model and its correlation with the characteristics and utilization of targeted patents. The econometric analysis presented in this study yields three significant findings. Firstly, NPEs with a higher inclination for litigation (referred to as "Litigation" NPEs) acquire patents with elevated infringement risk but comparable technological quality to those obtained by practicing entities. Secondly, patent aggregators (identified as "Portfolio" NPEs) and technology companies (termed "Technology" NPEs) acquire patents of superior quality compared to those secured by practicing entities. Thirdly, patent acquisitions by "Litigation" NPEs and "Portfolio" NPEs result in a decrease in the subsequent utilization of protected technologies..

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  • Sterzi, Valerio & Maronero, Cecilia & Orsatti, Gianluca & Vezzulli, Andrea, 2023. "Non-Practicing Entities and their patent acquisition activity in Europe," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 202306, University of Turin.
    • Handle: RePEc:uto:labeco:202306
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