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An Empirical Analysis of the Patent Troll Hypothesis: Evidence from Publicly-Traded Firms

by Noel Maurer, Stephen Habervia IP2 Working Paper Series
Tuesday, January 10, 2017

Do firms that earn revenues from licensing their patent portfolios, rather than producing physical products—often referred to as patent assertion entities (PAEs)—frustrate or facilitate innovation? Based on data from the SEC filings of 26 publicly-traded firms that an expert (RPX Corporation) has categorized as PAEs, covering the period 2000 to 2016, we estimate: their spending on R&D, patent acquisition, and litigation; and their revenues, rates of return on assets, market returns, and risk-return ratios. 

Studying the Impact of eBay on Injunctive Relief in Patent Cases

by Kirti Gupta, Jay P. Kesanvia IP2 Working Paper Series
Tuesday, January 10, 2017

We find that the U.S. Supreme Court decision in eBay v. MercExchange has had a significant impact on injunctive relief in patent cases. Our extensive analysis with a significant dataset involving thousands of patent cases both pre- and post- eBay shows that the eBay decision has reduced, rather dramatically, both the level at which injunctive relief is sought in patent cases and the rate at which they are granted, particularly for preliminary injunctions. 

Is There an Anti-commons Tragedy in the Smartphone Industry?

by Alexander Galetovic, Stephen Haber, Lew Zaretzkivia IP2 Working Paper Series
Monday, January 9, 2017

An influential literature claims that standard setting in the smartphone industry creates monopoly power. Moreover, because there are many owners of standard-essential patents, and each may independently exercise monopoly power (a phenomenon called royalty stacking), an anti-commons tragedy may ensue. With actual data from the smartphone industry, we show that royalty stacking theory predicts a cumulative royalty yield of nearly 80 percent. That is, it predicts that four-fifths of the price of a smartphone will accrue to patent holders. 

Technology Entry in the Presence of Patent Thickets

by Bronwyn H. Hall, Christian Helmers, Georg von Graevenitzvia IP2 Working Paper Series
Thursday, January 5, 2017

We analyze the effect of patent thickets on entry into technology areas by firms in the UK. We present a model that describes incentives to enter technology areas characterized by varying technological opportunity, complexity, and the potential for hold-up due to the presence of patent thickets. We show empirically that our measure of patent thickets is associated with a reduction of first time patenting in a given technology area controlling for the level of technological complexity and opportunity. 

Issues preceding CCI investigation of abuse of dominance in SEP cases: Its relevancy at the stage of initiating investigation against SEP holders

by Indranath Gupta, Vishwas H. Devaiahvia IP2 Working Paper Series
Thursday, January 5, 2017

This paper seeks to understand the SEP related incidents in the ICT cases leading up to the stage of prima facie investigation by the Competition Authority of India (CCI). The prima facie investigation decides abuse of dominance and may trigger further investigation. This paper observes the process of investigation adopted by CCI upon a complaint filed by an implementer and looks at the further possibility for the CCI to consider certain relevant information, while initiating investigation against the SEP holder.

Who Feeds the Trolls? Patent Trolls and the Patent Examination Process

by Josh Feng, Xavier Jaravelvia IP2 Working Paper Series
Friday, December 2, 2016

Leveraging random examiner assignment and detailed patent prosecution data, we find that non- practicing entities (NPEs) purchase patents granted by examiners that tend to issue incremental patents with vaguely-worded claims. In comparison, practicing entities purchase a very different set of patents, but assert patents similar to those purchased by NPEs. 

The Basic Structure of Intellectual Property Law

by Richard A. Epsteinvia IP2 Working Paper Series
Thursday, December 1, 2016

Intellectual Property (IP) law contains at least six major branches: patents, copyright, trademarks (including trade names), rights of publicity, misappropriation, and trade secrets. Each branch has its own separate history that rests on a complex mixture of common law principles augmented by statutory and administrative materials. Each embodies delicate tradeoffs on what materials should be treated as private property and what materials belong in the public domain.

The Fallacies of Patent Holdup Theory

by Alexander Galetovic, Stephen Habervia IP2 Working Paper Series
Wednesday, November 2, 2016

Patent Holdup Theory avers that the patent system threatens the rate of innovation in the U.S. economy, particularly in information technology industries that are heavily reliant on Standard Essential Patents. We show that arrays of empirical tests falsify the core predictions of the theory. We therefore examine the logic of Patent Holdup Theory. 

The Inverse Cournot Effect in Royalty Negotiations with Complementary Patents

by Gerard Llobet, Jorge Padillavia IP2 Working Paper Series
Thursday, October 27, 2016

It has been commonly argued that the decision of a large number of inventors to license complementary patents necessary for the development of a product leads to excessively large royalties. This well-known Cournot-complements or royalty- stacking effect would hurt efficiency and downstream competition. In this paper we show that when we consider patent litigation and introduce heterogeneity in the portfolio of different firms these results change substantially due to what we denote the Inverse Cournot effect.

A New Dataset on Mobile Phone Patent License Royalties

by Alexander Galetovic, Stephen Haber, Lew Zaretzkivia IP2 Working Paper Series
Sunday, September 25, 2016

This note describes a the August 2017 update of the dataset that estimates the Average Cumulative Patent Royalty Yield paid in the mobile phone value chain— the sum total of patent royalty payments earned by licensors, divided by the total value of mobile phones shipped. In this update, we identify, with varying degrees of accuracy, 39 potential licensors in the smartphone value chain. We find that, of these, only 29 charged royalties in 2016, running from a low of $1.6 million to a high of $7.7 billion and summing almost $14.2 billion in total.