The Private Value of Software Patents

Bronwyn Hall and Megan MacGarvie

No 12195, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the value creation or destruction associated with the introduction of software patents in the United States in two ways. The first looks at the cumulative abnormal returns to Information and Communication Technology (ICT) firms around the time of important court decisions that impacted software patents, and the second analyzes the relationship between firms' stock market value, the sector in which they operate, and their holdings of software patents. We conclude that the market evaluated software patents as a negative development ex ante. Ex post, a greater number of firms in all ICT sectors invested in these patents, and these firms had slightly higher market values than those with no software patents. However, while we obtain clear evidence that the technological importance or quality of patented innovation mattered for the market value of hardware firms both before and after the legal changes, it is less clear that the marginal patent right per se was associated with increases in market value, and there are no significant valuation effects associated with patents for pure software firms after the change.

JEL-codes: L63 L86 O34 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-ict, nep-ind, nep-ino and nep-tid
Note: PR
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Citations: View citations in EconPapers (36)

Published as Hall, Bronwyn H. & MacGarvie, Megan, 2010. "The private value of software patents," Research Policy, Elsevier, vol. 39(7), pages 994-1009, September.

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Journal Article: The private value of software patents (2010)
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