Patent trolls on markets for technology - An empirical analysis of NPEs’ patent acquisitions

Patent trolls, or NPEs, appropriate profits from innovation solely by enforcing patents against infringers. They are often characterized as relying on low-quality patents, an assessment that, if correct, would imply that eradicating such patents would effectively terminate the NPE business. In this paper, we shed light on this issue by empirically analyzing NPEs’ patent acquisitions. We draw on a unique dataset of 392 U.S. patents acquired by known NPEs between 1997 and 2006, which we compare to three control groups of 784 U.S. patents each acquired by practicing firms. We find that the probability that a traded patent is acquired by an NPE rather than a practicing entity increases in the scope of the patent, in the patent density of its technology field and, contrary to common belief, in the patent's technological quality. Our findings thus support recent theoretical propositions about the NPE business model, showing that NPEs procure patents that are more likely to be infringed, harder to substitute for, and robust to legal challenges. The fact that NPE-acquired patents are of significantly higher quality than those in the control group implies that elevating minimum patent quality will not put an end to the NPE business, and suggests that this business is sustainable in the long run. We furthermore discuss the fact that NPEs are peculiar players on markets for technology insofar as they are solely interested in the exclusion right, not in the underlying knowledge. We posit that transactions involving NPEs may only be the tip of the iceberg of “patent-only” transactions, a conjecture with strong implications for the efficiency and the study of markets for technologies. Managerial and policy implications are discussed.     

企业国际化经营专利风险因素——基于专利属性的实证研究

从专利属性的视角出发,分析企业未来遭遇海外专利侵权诉讼的风险因素。以专利授权为分割点,将专利属性划分为品质属性和价值属性,运用权利要求数量、后向引用和专利家族三个变量描述专利品质属性,运用专利权维持、专利授权后审查、向前引用、专利权交易和专利权融资担保等变量来描述价值属性,进而分析专利品质属性、专利价值属性与专利侵权诉讼的关联;以中国企业在美国市场的专利侵权涉案专利为对象开展实证研究。结果表明:专利未来发生侵权的可能性,不仅与专利授权时的品质属性相关,同时与授权后专利运行中形成的新的价值属性相关;上述属性上的差异,可以帮助企业识别出市场上高风险专利,进而预测企业未来发生专利侵权诉讼的可能性。研究成果对于中国企业国际化经营中实施专利清查和专利风险预警有积极作用。     

Using patent citation patterns to infer innovation market competition

We propose an empirical strategy to estimate competition in innovation markets. Our method relates firms’ market return on equity to information about patent citation patterns. Two innovations are implemented in the methodology. First is the application of daily abnormal stock returns rather than annual measures of Tobin's q. Second is the creation of citation patterns related to the area of science a firm patents in as represented by the detailed patent classification system. We find that markets positively reward firms when patents are granted. We further find that firm's market value increases when its patent portfolio is cited. We find evidence of competition in innovation markets. The market reacts at the time that the citation occurs and does not anticipate future citations at the time of patenting. Holding this effect constant, we find that citations from patents in the same area of science tend to reduce market value. We interpret these findings as consistent with more citations indicating more valuable intellectual property but citations from competing technologies decreasing it.     

Continuing patent applications at the USPTO

Despite their growing importance for firm innovation strategy and frequent appearance in U.S. patent policy debates, how continuing patent applications are used remains unclear. Turn-of-the-century reforms strongly limited opportunities to extend patent term and surprise competitors, but continuing applications have steadily risen since. We argue that they retain a subtle use, as applicants can file continuations to keep prosecution open and change patent scope after locking in gains with the initial patent. We document a sharp drop in parent abandonment and rise in continuations per original patent after the reforms. Continuing applications are more privately valuable than original patents, are filed in more uncertain contexts, for higher value technologies, by more strategic applicants, and react strongly to the notice of allowance. The evidence supports a current strategic use of continuing applications to craft claims over time.     

German employee inventors’ compensation records: A window into the returns to patented inventions

This paper uses a novel data source, namely German employee inventors’ compensation records compiled in compliance with the German Employee Invention Act of 1957 to estimate the returns to patented inventions. In contrast to patent value estimates obtained from surveys and renewals, these records primarily provide a measure of the value of the use of the invention and not the value of patent protection. While indicators of patent value explain much of the variation in these patent value estimates, the values are only weakly correlated with the estimated renewal value of the patents. The distribution of patent value from these records is highly skew, with the vast majority of the returns earned by a select set of high valued patents, consistent with finding for other measures of patent value. The value estimates however are considerably lower than recent survey estimates with most of the patents having little or no realized value, suggesting that the returns appropriated through the use of an invention may represent only a fraction of the value of a patented invention.     

An examination of the intertemporal returns of patented inventions

This paper examines the intertemporal returns of patented inventions using estimates of patent value obtained from German employee inventors’ compensation records. The paper finds heterogeneity in the mean age and dispersion of the annual returns by technology and cumulative patent value. While the returns earned by most patents dissipate rapidly, high valued patents tend to receive significant returns through the latter part of the patent term. These high valued patents which account for the vast majority of the realized returns, further can be identified based on past returns, relatively early in the patent term. These findings suggest that while shortening the length of the patent term could substantially reduce realized returns, graduated maintenance fees may not adversely affect returns, as firms would be able to identify and selectively renew the subset of high valued patents.     

International patent disputes: Evidence from oppositions at the European Patent Office

The impact of the geographical origin of patents on the probability of an opposition being filed and a patent being revoked has been examined in this paper, after accounting for patent value indicators and industry specificities. The study is based on a dataset of approximately 450,000 EPO granted patents and 24,000 patent opposition cases in the years 2000–2008. We find that patents with a first priority in the US are less likely to be challenged, although they are relatively more likely to be revoked than patents with a priority in a member country of the European Patent Convention. Patents from Japan have less probability of being opposed and are less likely to be revoked than the other countries. A disaggregation of the European countries has revealed that patents with a German priority have a higher or similar likelihood of being opposed than patents from the other countries, with the exceptions of The Netherlands and Denmark.     

区域技术差异对专利价值的影响

专利技术特征是专利价值生成的重要因素。现有研究通常假定技术创新相互独立,忽视同一区域技术创新之间存在的关联。本研究以中国知识产权局1985-2009年间授权的战略新兴产业专利为研究对象,分析包括区域技术差异在内的多种专利技术特征对专利价值的影响。将专利存续期作为专利价值的代理变量,估计专利生存函数发现:中美日三国在各技术子领域的专利价值与其在该领域的技术相对优(劣)势有明显关联,而与技术领域本身的相关性并不明显。随后建立COX风险回归模型进行量化研究,结果显示:相比于技术领域因素,区域技术差异对专利价值生成更具显著且稳定的影响。区域技术优势能够促进专利维持并最终提升专利价值。     

Applicant and examiner citations in U.S. patents: An overview and analysis

Prior art patent citations have become a popular measure of patent quality and knowledge flow between firms. Interpreting these measurements is complicated, in some cases, because prior art citations are added by patent examiners as well as by patent applicants. The U.S. Patent and Trademark Office (USPTO) adopted new reporting procedures in 2001, making it possible to measure examiner and applicant citations separately for the first time. We analyzed prior art citations listed in all U.S. patents granted in 2001-2003, and found that examiners played a significant role in identifying prior art, adding 63% of citations on the average patent, and all citations on 40% of patents granted. An analysis of variance found that firm-specific variables explain most of the variation in examiner-citation shares. Using multivariate regression, we found that foreign applicants to the USPTO had the highest proportion of citations added by examiners. High-volume patent applicants had a greater proportion of examiner citations, and a substantial number of firms won patents without listing a single applicant citation. In terms of technology, we found higher examiner shares among patents in electronics, communications, and computer-related fields. Taken together, our findings suggest that firm-level patenting practices, particularly among high-volume applicants, have a strong influence on citation data and merit additional research.     

我国创新药企被提专利无效请求风险预警研究

我国正由仿制药大国向创新药大国加速转型,越来越多的企业由仿制药企业向创新药企业转变。新角色下被提专利权无效宣告请求的风险日益升高,对企业专利管理实践提出新挑战。首次将我国原国家食品药品监督管理总局药品审评中心发布的《中国上市药品目录集》中创新药企业信息,与国家知识产权局专利局复审和无效审理部公布的专利权无效宣告请求案件信息链接。基于法律纠纷理论模型框架,实证分析药品发明专利无效请求发生概率的影响因素。研究表明：专利价值越高、专利法律质量越低、信息不对称程度（或当事人对无效结果的期望分歧）越大,被提无效请求的风险越高。与理论分析不一致的是,与制剂/组合物专利相比,药用化合物和药用生物分子专利被提无效请求的概率更低。研究结论为企业有效开展药品发明专利被提无效请求的风险预警提供有益借鉴。     

美国财政资助专利的计量分析

以美国财政资助专利为研究对象,对其资助机构、专利权人和技术领域的分布进行了统计分析,并重点分析了财政资助专利的引文特征。研究发现,与非财政资助专利与科学论文的关联性相比,财政资助专利与科学论文有着更高的科学关联性。因此,我国应建立并完善财政资助专利的信息披露制度,促进基础研究尤其是应用导向的基础研究中的专利产出。     

Citations, family size, opposition and the value of patent rights

We combine estimates of the value of patent rights from a survey of patent-holders with a set of indicator variables in order to model the value of patents. Our results suggest that the number of references to the patent literature as well as the citations a patent receives are positively related to its value. References to the non-patent literature are informative about the value of pharmaceutical and chemical patents, but not in other technical fields. Patents which are upheld in opposition and annulment procedures and patents representing large international patent families are particularly valuable.     

Foreign patenting in the U.S. as a technology indicator: The case of Norway

Foreign patenting in the U.S. has been considered to be a useful technology indicator in comparisons between countries. In order to shed light on this topic, this paper will try to explain foreign patenting in the U.S. by way of data for one country - Norway.A crucial question is what role is played by exports in explaining the foreign patent activity. Is the U.S. patenting just an indicator of the export performance, or is it the other way around; that technology - measured by foreign patent activity - is an important trade explanatory variable.The first part of this paper deals with the relationship between Norwegian U.S. patenting and export to the U.S. by way of time-series analysis on data from 1883 to 1980. Then some more detailed analysis are done on industry-level data from 1920 and from 1960–1980. An hypothesis is further tested for the possible relationship between foreign U.S. patenting and the international business-cycles. Finally a detailed but tentative analysis is done on firm-level data for the years 1969–1980.The results lend partial support to the assumption that foreign U.S. patent activity reflects innovative activity in the country where the patents originated. A major advantage in using foreign patenting in the U.S. as a technology indicator, is that this type of data in general seems to be of a higher quality than domestic patent data.     

An empirical study on the determinants of essential patent claims in compatibility standards

In the field of compatibility standards, an increasing number of companies claim to own so-called essential patents (i.e. those patents that are indispensable for designing and manufacturing products conforming to the standard). It is widely believed that the ownership of such patents is a very valuable bargaining tool in cross-license negotiations, while for non-producing firms such patents may result in a substantial stream of licensing revenues. In this paper we study the determinants of essential patent claims in compatibility standards. In particular, we assess the role of two main factors: the significance of the technological solution contained in the patent and the involvement of the applicant of the patent in the standardisation process. We examine the case of W-CDMA, one of the most successful standards in mobile telecommunications. We compare the patents claimed essential for this standard with a control group of randomly selected, unclaimed patents covering the same time period and technology classes. We find empirical evidence that both factors have significant impact on the probability that a patent is claimed as essential, but the involvement in the standardisation process is a stronger determinant than the technical value (‘merit’) of the patent. On the basis of our findings, we offer policy recommendations.     

The influence of strategic patenting on companies’ patent portfolios

This paper analyses whether strategic motives for patenting influence the characteristics of companies’ patent portfolios. We use the number of citations and oppositions to represent these characteristics. The analysis is based on survey data from German companies, which are combined with EPO data covering applications from 1991 to 2000. We find clear evidence that the companies’ patenting strategies are related to the characteristics of their patent portfolios. First, companies using patents in the traditional way to protect their technological knowledge base receive a higher number of forward citations for their patents. Second, the motive of offensive - but not of defensive - blocking is related to a higher incidence of oppositions, whereas companies using patents as bartering chips in collaborations receive fewer citations and fewer oppositions to their patents.     

环境规制对企业绿色技术创新的影响特征与异质性——基于中国上市公司绿色专利数据

摘 要 基于2004-2015年中国沪深股市上市公司绿色专利数据,建立环境规制综合衡量指标,运用系统GMM估计方法,研究环境规制对企业绿色技术创新的影响特征与作用机理,分析绿色专利类型、企业所有制性质与行业类型的异质性。环境规制对企业绿色创新有先抑制后促进的“U”型影响特征;绿色技术创新活动中,环境规制会促进价值更高的绿色发明专利创新;非国有企业对于环境规制容忍度较低,“U”型拐点到来较早,且倾向于价值更高的绿色发明专利创新;环境规制对清洁行业与污染行业绿色技术创新的“U”型影响特征存在差异,清洁行业多体现“U”型曲线右半段,拐点较早,污染行业则完整体现了“U”型曲线全过程,拐点较迟。因此,采取灵活性差异化的环境规制政策对促进绿色创新与绿色发展具有积极作用。     

专利质量表征及其有效性：中国机械工具类专利案例研究

在全球专利膨胀的大背景下,有效的早期专利评价指标是把握技术发展态势服务战略和技术管理的有力工具。本文以中国专利局1986-2005年间授权的机械工具领域发明专利为研究对象,以专利文献中早期可获得的经济或技术信息为基础构建出专利质量早期表征指标,选择专利维持时间作为专利质量的代理变量,建立生存分析模型,利用SPSS统计软件研究了这些早期指标表征专利质量的有效性。研究表明,该技术领域中权利要求项数的增加能够降低国内专利生存危险,专利说明书页数和发明人数的增加能够降低国外专利生存风险,对应专利组的平均专利质量也相对高。结果说明,权利要求项数、说明书页数、发明人数等早期文献指标能够不同程度地表征专利质量。本研究结果、思路及方法对探索和确定早期专利评价指标特别是适合中国专利数据的指标具有启发性,也为从广义虚拟经济的角度研究专利资产价值提供参考。     

Royalties, evolving patent rights, and the value of innovation

The value of an innovation to the innovator can change over time, especially in response to changes in the legal protection (such as patent rights) afforded the innovator. A proven-valid-and-infringed patent is a more valuable economic commodity than is an untested patent. The increase in value can be estimated using the success rate of patent lawsuits. Using a database of the outcomes of U.S. patent litigation, we find that plaintiffs win patent litigation some 45% of the time at the trial court level. This has implications both for patent damages awards and for the incentives to innovate.