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Trends in private patent costs and rents for publicly-traded United States firms

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  • Bessen, James
  • Neuhäusler, Peter
  • Turner, John L.
  • Williams, Jonathan

Abstract

We use detailed data to estimate the private costs and private rents of United States patents for publicly-traded firms. In analyzing costs, we first introduce a novel theoretical model to interpret our estimates. We then combine lawsuit data from Derwent Litalert with non-practicing entity (NPE) lawsuits collected by Patent Freedom, and use an event-study approach to estimate losses suffered by alleged infringers during 1984–2009. To estimate rents, we combine patent data from the USPTO and EPO with financial data from COMPUSTAT, and use market-value regressions to estimate the value of patent rents for publicly-traded US firms during 1979–2002. We find that private costs exceed private rents during 1999–2000 and the trend in costs is sharply higher. Costs also exceed forecasts of rents for 2005–09. A surge in the number of NPE lawsuits contributes to the increase in the gap.

Suggested Citation

  • Bessen, James & Neuhäusler, Peter & Turner, John L. & Williams, Jonathan, 2018. "Trends in private patent costs and rents for publicly-traded United States firms," International Review of Law and Economics, Elsevier, vol. 56(C), pages 53-69.
    • Handle: RePEc:eee:irlaec:v:56:y:2018:i:c:p:53-69
    DOI: 10.1016/j.irle.2018.07.001
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    3. Bereskin, Fred & Hsu, Po-Hsuan & Latham, William & Wang, Huijun, 2023. "So Sue Me! The cross section of stock returns related to patent infringement allegations," Journal of Banking & Finance, Elsevier, vol. 148(C).

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    More about this item

    Keywords

    K2; O3; Event study; Market-value regression; Patent; Litigation; Non-practicing entities; Research and development;
    All these keywords.

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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