Trading and Enforcing Patent Rights

Alberto Galasso, Mark Schankerman and Carlos Serrano

No 17367, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply that patent transactions should increase litigation risk. We identify a new source of gains from trade, comparative advantage in patent enforcement, and show that transactions driven by this motive should reduce litigation. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that reallocation of patent rights reduces litigation risk on average, but the impact is heterogeneous. We show that patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient, and the impact of trade on litigation depends on characteristics of the transactions.

JEL-codes: H24 K41 O32 O34 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-ino and nep-int
Note: IO LE PR
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Citations: View citations in EconPapers (34)

Published as Galasso A ., M. Schankerman and C. Serrano, 2013 , Trading and Enforcing Patent Rights , RAND Journal of Economics 44, 275 - 312 .

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Related works:
Journal Article: Trading and enforcing patent rights (2013)
Working Paper: Trading and enforcing patent rights (2013)
Working Paper: Trading and Enforcing Patent Rights (2011)
Working Paper: Trading and Enforcing Patent Rights (2011)
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