This study investigates the impact of the recent US patent policy weakening around the America Invents Act, analyzing the US market for patent transactions. In an investigation of transactions derived from the USPTO’s Patent Assignment Database, we examine patent transfers between companies from 1995 until September 2015. Due to declining acquisitions, but increasing sales of patents conducted by patent trolls after 2012, our findings suggest that the business of patent trolls largely suffered from recent policy measures. Furthermore, we find that large patent trolls have changed their strategy towards splitting risk, as they recently tend to distribute their patent portfolio across different shell companies.
However, we are unable to identify a decline concerning the activity of firms on the market for patent transactions, due to the weakening of patent protection. We ascribe the consistent level of participation on the market to a redistribution of intellectual property rights after the policy changes and to purchases motivated by speculations on a further policy reversal. Additionally, we observe an unexpected increase in patent sales to non-US companies in 2014 and 2015, as the slight decrease in patent purchases by other non-US companies is overcompensated by a growing number of transactions to Asian assignees.
Table of Contents
1. Introduction
2. Literature review
2.1 Patents and patent policy change in scientific literature
2.1.1 Patents
2.1.2 Patent policy changes in the history of the US patent system
2.1.3 The impact of patenting strategies on the patenting surge
2.1.4 Evidence from universities and federally financed laboratories
2.2 Markets for technology
2.2.1 Patent transactions
2.2.2 Licensing
2.2.3 The emergence of patent trolls
3. Leading the way towards the weakening of the patent system
3.1 The problems of the pro-patent regime
3.2 The America Invents Act heralding the reversal of patent policy
4. Hypotheses
5. Data and methodology
5.1 Dataset and sample construction
5.2 Variables
6. Results and discussion
6.1 Evidence from time series examinations
6.2 Robustness check
7. Conclusion
7.1 Theoretical and practical implications
7.2 Limitations and future research
Research Objectives and Key Topics
This study investigates the impact of recent legislative weakening of US patent rights, particularly surrounding the America Invents Act (AIA), on the US market for patent transactions. The research explores whether these reforms successfully curbed the activities of patent trolls and how various market participants, including foreign firms, have adapted their transaction strategies in response to increased uncertainty and changing legal conditions.
- Impact of the America Invents Act on patent transaction market activity.
- Strategic shifts of patent trolls (non-practicing entities) in response to legal reforms.
- Analysis of foreign firm participation and cross-border patent acquisitions.
- Empirical verification of patent troll "risk-splitting" strategies via shell company usage.
- Evaluation of overall US patent market trends through quantitative longitudinal data.
Excerpt from the Book
The emergence of patent trolls
An increasingly important phenomenon on markets for technology representing one of the reasons for the proclamation of the AIA and the recent policy change towards weaker patent rights is certainly the activity of patent trolls, commonly known as non-practicing entities (NPEs), patent sharks or patent monetizers. These firms are characterized by their mere activity in enforcing patents against infringers to receive damages awards or settlement payments (Reitzig et al., 2007). Trolls are usually not actively using their patented technologies for “real” production or other practical purposes. Especially in cumulative technology industries, the patent thicket created by overlapping patents provides a fertile ground for the operations of patent trolls, as the thicket makes inadvertent infringement of patents likely (Reitzig, Henkel, & Schneider, 2010; Shapiro, 2001).
It is important to keep in mind that various authors define patent trolls differently. Bessen and Meurer (2008, p. 17) generally define patent trolls (not NPEs) as “individual inventors who do not commercialize or manufacture their inventions”, while Reitzig et al. (2007, p. 137) define patent sharks or trolls as “individuals or firms that seek to generate profits mainly or exclusively from licensing or selling their (often simplistic) patented technology to a manufacturing firm that, at the point in time when fees are claimed, already infringes on the shark’s patent and is therefore under particular pressure to reach an agreement with the shark.” The important difference between these two definitions is that Bessen and Meurer (2008) include pure research institutions, such as universities, research labs, or individual inventors in their concept of patent trolls, although these actors usually want to license their technology ex ante and actively conduct research. Reitzig et al. (2007) on the other hand exclude such actors from their definition. In our study, we follow the definition of Reitzig et al. (2007). We acknowledge the fact that the word troll includes a negative connotation, whereas for example “Non-Practicing Entity” (NPE) would be a more neutral expression. Nevertheless, as the definition of NPEs usually includes the actors discussed above, we decide to use the term patent trolls to preclude this misunderstanding.
Summary of Chapters
Introduction: Provides the context of fluctuating intellectual property strength and introduces the primary focus on the US patenting environment following the Leahy-Smith America Invents Act.
Literature review: Surveys existing research on patenting history, the evolution of the US patent system, and the development of markets for technology, including the behavior of patent trolls.
Leading the way towards the weakening of the patent system: Details the transition from a pro-patent regime to a period of reforms, highlighting key court decisions and the implementation of the America Invents Act.
Hypotheses: Formulates empirical expectations regarding the impact of policy changes on market participation, foreign investment, and the strategic behavior of patent trolls.
Data and methodology: Explains the construction of the transaction dataset from the USPTO and outlines the empirical approach, including descriptive variables and the robustness check.
Results and discussion: Presents the time-series evidence and probit regression outcomes, examining the shifts in transaction behavior and the validity of the proposed hypotheses.
Conclusion: Synthesizes the main research findings, discusses implications for future patent strategy, and outlines limitations and potential avenues for further research.
Keywords
Markets for technology, Weakening of patent rights, America Invents Act, US patent policy, Patent trolls, Patent transactions, Intellectual property, Non-practicing entities, Patent thickets, Legislative reform, Technology licensing, Patent litigation.
Frequently Asked Questions
What is the core focus of this research?
This work examines the economic impact of recent legislative changes in the United States—specifically the weakening of patent rights around the America Invents Act—on the market for patent transactions.
What are the primary subjects analyzed in the study?
The study analyzes market participation by various firms, the purchasing behavior of foreign companies, and the strategic reactions of patent trolls to a more restrictive legal environment.
What is the central research objective?
The main objective is to determine if legislative interventions, such as the AIA, have effectively curbed patent troll activity and how these changes have influenced the broader US market for technology transfers.
Which scientific methods are employed?
The authors use a quantitative approach involving time-series analyses of USPTO Patent Assignment Database records, combined with a probit regression for robustness testing.
What is covered in the main section of the paper?
The main part covers the theoretical background of patent policy, the historical emergence of patent trolls, the legislative shift toward weaker patent protection, and empirical testing of hypotheses regarding market transaction volumes and troll behavior.
How would you characterize this research with keywords?
Key terms include patent transactions, America Invents Act, patent trolls, markets for technology, and legal reform impact.
How do patent trolls adapt to the new legal environment?
The research finds that large patent trolls increasingly utilize risk-splitting strategies, transferring patent portfolios across a network of shell companies to mitigate the impact of legal challenges.
Does the data show a decline in overall market activity?
Surprisingly, the study does not find a definitive decline in overall market activity; instead, it observes significant reallocation and increased transaction volumes, partly driven by speculative behavior and Asian foreign investment.
- Citar trabajo
- Alexander Mosen (Autor), 2016, Patent policy change in the USA. An empirical analysis of the effect on patenting strategies, Múnich, GRIN Verlag, https://www.grin.com/document/380366
