Earnings Targets, Strategic Patent Sales, and Patent Trolls

Jinhwan Kim and Kristen Valentine
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Jinhwan Kim: Stanford U
Kristen Valentine: U of Georgia

Research Papers from Stanford University, Graduate School of Business

Abstract: Innovative public firms sell 9.6% (615) more patents in the last month, relative to the first half of the fiscal year. Consistent with reporting incentives driving these sales, they are more pronounced among firms with strong incentives to meet earnings expectations. Patents sold in the last month are litigated more frequently because they are disproportionately sold to “patent trolls†, who opportunistically acquire patents to engage in litigation. We find anti-troll laws reduce opportunistic acquisition among trolls. We highlight a novel consequence of corporate reporting incentives: its contribution to strategic patent sales, which in turn impact the market for innovation.

JEL-codes: D23 M40 M41 O30 O31 O32 O34 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:4162

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