Patent Trolls, Litigation, and the Market for Innovation

Axel Haus () and Steffen Juranek
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Axel Haus: Dept. of Management and Microeconomics, Goethe University Frankfurt, Postal: Goethe University Frankfurt, Department of Management and Microeconomics, Grueneburgplatz 1, 60323 Frankfurt, Germany, http://www.wiwi.uni-frankfurt.de/en/departments/mm/professuren/professur-walz/research-teaching-assistants/axel-haus.html

No 2014/24, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: We examine the role of non-practicing entities (NPEs), often called patent trolls, in patent litigation. We present a theoretical model that predicts that cases with NPE patentees resolve faster. We test this prediction using a hand-collected data set of US patent litigation cases. We find that NPEs challenge larger and more technology intensive firms, and use more valuable patents from technology areas that have a less fragmented ownership base compared to the control group. Controlling for these factors, we find that NPE cases are indeed resolved faster. NPEs help to increase the speed of diffusion of technology into the economy; therefore, increasing the effectiveness of the market for innovation.

Keywords: Litigation; patents; patent trolls; technology diffusion (search for similar items in EconPapers)
JEL-codes: K00 K41 O34 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014-06-11
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~, nep-law, nep-sbm and nep-tid
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