Impact of Patent Enforcement on Innovation Activity

In this set of research projects, I use different measurements of patenting outcomes to examine how patent enforcement impacts invention and innovation activities as well as innovation disclosure. One empirically examines the impact of patent enforcement by different types of entities, including Patent Assertion Entities, on invention in patent technology classes using difference-in-difference models. Another explores how patent enforcement impacts firms’ innovation disclosure and IP differentiation in the technology space using natural language processing.

Working Paper

How does patent litigation by Patent Assertion Entities impact invention activity?

Aija Leiponen, Zhe Xue

I have presented this work at Cornell IET Brownbag Seminar in 2020, at Munich Summer Institute 2021 in the poster slam, and at the Annual Meeting of the Academy of Management 2021 in the paper session "Exploring the USPTO". This paper has also been selected as a "Best Paper" and the abridged version of the paper has been published in the 2021 AOM Annual Meeting Proceedings. I will be presenting this paper at the European Policy for Intellectual Property 2021 Conference in one of the parallel sessions. I am also invited as a paper presentation speaker at TILEC Workshop on Economics of Patents and Standards.

Abstract: Patent Assertion Entities (PAEs) can enhance invention by creating a market for patents or reduce invention by making the returns to invention uncertain. We empirically examine the impact of patent enforcement by different types of entities, including Patent Assertion Entities, on invention in US patent classes. We construct a new database of litigation and invention and estimate difference-in-difference models to identify the net impact of patent litigation on invention. We find that, in the current US economy and legal system, patent litigation within specific technology classes reduces invention in the same classes. We also find that litigation by PAEs leads to a significantly larger negative impact on invention, compared to litigation by product companies, and suggest that this is because PAEs’ interest in financial rather than in­kind settlements reduces the available internal finance for invention. The negative impact of litigation has grown in recent years.

Keywords: patents, litigation, patent assertion entity, PAE, intellectual property rights, innovation, invention

Work in Progress

Patent litigation and firms’ invention disclosure strategies