Acquisition Of Patents Research Articles

The effects of patent litigation involving NPEs on firms’ patent strategies

Considering patent disputes with non-practicing entities (NPEs) as facilitators of change in existing patent strategies, this study analyzed their effects on the patent strategies of firms subsequent to lawsuits. After experiencing litigation with NPEs as defendants, the study focused on patent creation among the patent strategy. We mainly examine the types of patents filed by the affected firms, where they are applied, and how they are obtained. With a sample of 653 patent lawsuits in the U.S. medical device industry, the study used the generalized method of moments (GMM) to test the influence of litigation involving NPEs on patenting activities at the firm level. The results suggest that firms that are in litigation involving NPEs are more likely to broaden the scope of their searches, and to apply for patents in a wider range of areas, which is achieved through co-patenting and the acquisition of patents from the technology market.

Who's winning the low-carbon innovation race? An assessment of countries' leadership in renewable energy technologies

Intellectual property is a central issue in climate negotiations. On the one hand, it shapes and encourages innovation in low-carbon technologies. On the other hand, it can reduce access to these technologies by giving patent holders market power. We analyse the interactions between climate negotiations and the acquisition of renewable energy technology patents. First, we present the history of climate negotiations, emphasizing the role of technologies. Second, we conduct an empirical analysis aimed at determining which countries could be considered leaders in renewable energy technologies (RETs). Major changes were observed in the geographical distribution of low-carbon innovation during the 2000s, foreshadowing a reorganization of the geopolitical balances of innovation in renewable energies.

Are patent assertion entities a threat to Europe?

... Patent Assertion Entities (PAEs) are companies active in the acquisition and licensing of patents.1 However, they are frequently criticized and negatively referred to as ‘patent trolls’, harmful predators that engage in speculative and abusive patent litigation against manufacturing companies, demanding excessive licensing fees that do not reflect the proper value of the technology. PAEs supposedly exploit some characteristics of litigation, such as the high costs, the threat of injunctive relief, high damage awards, and the fact that they are immune from counter-suits because they do not produce patented products, to force companies into a settlement or licensing agreements for patents of questionable value.2 PAEs have been claimed to impose a ‘tax on innovation’,3 harming manufacturing companies and increasing prices for consumers. PAEs are largely active in the USA: according to some estimates during the period of 2012–2017 the majority of all US patent suits originated from PAEs.4 Although Europe has not witnessed comparable PAE activity, one recent study reported a 19 per cent annual growth rate of allegedly abusive PAE litigation in Europe,5 while one group warned against the harmful effects of PAEs on Europe’s innovativeness.6

The Effect of Competition Law on Patent Remedies

Although competition law and IP law probably pursue complementary goals, competition laws can: (i) affect remedies available for patent infringement; and/or otherwise, (ii) limit the conduct of patentees, particularly when transferring or licensing their patents. This chapter discusses the cases in which tensions between the protection of patents in complex products and the competition laws have arisen or may arise, particularly as regards the ability of owners of standard essential patents (SEPs) to monetise their patents either by seeking an injunction against implementers or by refusing to grant licences complying with previously given commitments—generally, commitments to license on fair, reasonable and nondiscriminatory (FRAND) terms. This chapter also examines potential competition law constraints on the pricing of patent licences, other licensing terms, multi-level licensing and level discrimination, patent pools, sale of patent portfolios and patent acquisitions.

Prophylactic Merger Policy

An important purpose of the antitrust merger law is to arrest certain anticompetitive practices or outcomes in their “incipiency.” Many Clayton Act decisions involving both mergers and other practices had recognized the idea as early as the 1920s. In Brown Shoe the Supreme Court doubled down on the idea, attributing to Congress a concern about a “rising tide of economic concentration” that must be halted “at its outset and before it gathered momentum.” The Supreme Court did not explain why an incipiency test was needed to address this particular problem. Once structural thresholds for identifying problematic mergers are identified there is no need to condemn mergers that fall below that threshold. In the future merger law could always be brought to bear if the relevant numbers became larger. But this does not mean that incipiency tests are unimportant. They properly have a different use than the one that the Supreme Court identified. A better use of incipiency tests is to prevent certain bad outcomes early when antitrust rules make it difficult or impossible to prevent them later. Today most mergers are challenged before they occur, based on models that rest on an assumption of profit maximization to predict post-merger performance. As a result, the feared post-merger conduct has not occurred either and the evidence pertains to predicted rather than actual effects. This makes it important to place some limits on merger law’s prophylactic reach. First, the language of §7 requires causation -- a showing that the merger is what is likely to facilitate that feared anticompetitive conduct. Second, we must be satisfied that this conduct, if it should occur, will be both anticompetitive and difficult to reach through direct application of the antitrust laws. Third, the merger must raise a significant risk that the conduct will occur. Finally, as with all merger cases, there must not be offsetting gains that serve to justify the merger notwithstanding these threats to competition. This paper then applies these considerations to mergers threatening coordinated interaction, merges to monopoly or facilitating anticompetitive unilateral effects, vertical mergers, exclusionary IP acquisitions, and acquisitions of very small but highly innovative firms. The paper discusses some high profile transactions, including the AT&T/Time Warner acquisition, currently on appeal. In such situations the challenger applies widely accepted economic tools to estimate anticompetitive effects by considering how the merger would change the post-merger firm’s profit-maximizing behavior. The AT&T/Time Warner opinion was wrong to credit the testimony of the firms’ employees that they would not maximize profits subsequent to the transaction. That conclusion, if accepted and broadly applied, would undermine most of the basis for merger analysis today. Finally, the paper examines the recent Intellectual Ventures decision, now subject to appeal, which involves an allegedly anticompetitive acquisition of patents.

Buying Monopoly: Antitrust Limits on Damages for Externally Acquired Patents

The “monopoly” authorized by the Patent Act refers to the exclusionary power of individual patents. That is not the same thing as the acquisition of individual patent rights into portfolios that dominate a market, something that the Patent Act never justifies and that the antitrust laws rightfully prohibit.Most patent assignments are procompetitive and serve to promote the efficient commercialization of patented inventions. However, patent acquisitions may also be used to combine substitute patents from external patentees, giving the acquirer an unearned monopoly position in the relevant technology market. A producer requires only one of the substitutes, but by acquiring the combination it can impede product market rivals by limiting their access to important technological inputs. Similarly, a patent assertion entity may acquire substitute patents to eliminate inter-licensor competition, enabling it to charge supra-competitive license fees, much like a merger or cartel. For example, by acquiring two or more substitute patents that collectively dominate a market a PAE can effectively monopolize the technology for that market. Such anticompetitive practices are regularly condemned in conventional product contexts, but the courts have not yet applied the same antitrust logic to patent markets. And they passively encourage anticompetitive patent acquisitions by awarding large damages when such patents are infringed.We propose that infringement damages for an externally acquired patent be denied if the acquisition served materially to expand or perpetuate the plaintiff’s dominant position in the relevant technology market. By weakening enforcement, this limits the patent holder’s ability to use such acquisitions to anticompetitive ends. We do not suggest that a dominant patent holder should be prohibited from securing external patent rights in the relevant technology market, but simply that it should obtain them through nonexclusive licensing, not transactions that restrict third party access. This is as valuable to patent policy as it is to antitrust, for it will tend to increase innovation by discouraging systematic monopoly in technology markets.

Corporate strategies for technology acquisition: evidence from patent transactions

PurposeThe purpose of this paper is to examine, for a sample of ten corporations in three industries (i.e. automotive suppliers, semiconductors, and computer networks), the different strategies that firms undertake when acquiring patent-protected technologies. In particular, the authors analyze and compare two alternative channels for patent acquisition: markets for technology (MFT) and merger and acquisition (M&A) processes.Design/methodology/approachThe authors implement two types of analyses, at both patent and firm level. First, the authors perform an econometric analysis to evaluate whether acquired patented technologies differ in their patent bibliographic characteristics with respect to patent-protected technologies that have been developed internally by the examined firms. The authors then investigate the presence of differences in the characteristics of transacted patents acquired in the MFT or by means of M&A activities. Second, the authors take a firm-level perspective and examine the technology acquisition strategies adopted by selected companies to identify the presence of common patterns, industry-driven specificities and firm peculiarities.FindingsThe authors find that acquired patented technologies are, on average, more complex, of higher technical merit and the corresponding patents show a higher legal robustness. Econometric results reveal the presence of differences between M&A and MFT patents: the latter seem to protect less complex, and thus easier to trade, inventions. The analysis of the patterns of patent acquisitions at the firm level shows the presence of different strategies for the external sourcing of patented technologies, based on whether acquired patents protect core or non-core technology areas of the analyzed firms. Such patterns are discussed in the light of the different streams of the literature on intellectual property (IP) management.Originality/valueThis paper makes use of a new and comprehensive data set of the US patent transactions that took place between 2002 and 2010. The authors added detailed data on the evolution of the corporate trees of analyzed firms. The paper contributes to the literature on technology acquisitions and MFT by examining the different channels for patented technology acquisitions. The issue represents an emerging area of interest in the field of IP management.

Patent Acquisition, Investment, and Contracting

Numerous works have examined the finance-related implications of intellectual property that is generated internally or acquired through MA patent licenses frequently contain royalties, which induce under-investment problems. Nevertheless, licensing can be explained in part by financial and strategic considerations. Licensing is more likely when buyers become financially constrained, when revenue can be shifted to low tax sellers, and when the buyer is a competitor acquiring rights to a valuable patent. Overall, these results suggest patent acquisitions are motivated by the pursuit of investment synergies, rather than innovation substitution, commercialization motives, or legal threats.

The role of process innovativeness in the development of environmental innovativeness capability

Previous research suggests that innovation resources (i.e. internal and external Research & Development, acquisition of machinery, hardware, software, patents, and licenses) enhance environmental innovations. However, it is unknown how these resources should be deployed to develop environmental innovativeness capability. This research builds upon the resource management framework and proposes that environmental innovativeness capability is developed, at the firm level, through a two-sequenced bundling process. First, innovation resources are bundled into process innovativeness capability. Then, process innovativeness capability is extended to develop environmental innovativeness capability. The proposed model is tested with data collected through the 2008 Community Innovation Survey in Germany. The results confirm this two-sequenced bundling process. Specifically, results indicate that internal, external, hybrid innovation resources, and knowledge brought through Research & Development cooperation with suppliers are bundled into process innovativeness capability. Then, process innovativeness capability is extended and bundled with the knowledge brought through Research & Development cooperation with public research institutions into environmental innovativeness capability. These results are important because they provide a much-needed understanding on the development of firm level capabilities to undertake environmental innovations. Finally, this paper recommends managers to deploy their innovation resources to build capabilities on innovating processes, which in turn is the base for developing environmental innovativeness.

Investment Channels in Innovation and Profit Windfalls from Patent Term Extensions

I show that mature innovating firms respond to exogenous cash flow by engaging in external patent acquisitions that diversify their patent portfolios into new technologies. By exploiting the random timing of patent term expiry dates and their unexpected extensions due to the Uruguay Round Agreements Act, I find that a one standard deviation increase in the citation-weighted patent portfolio share of term-extended patents leads to an increase in cash flow by 1.5 percent of book assets. Given these windfall profits, I find evidence of physical capital investment, debt issuance reduction, and acquisitions of new external technologies. Internal investments in R&D, on the other hand, show no response, suggesting high R&D adjustment costs for large, mature firms.

Penalizing the Underdogs? Employment Protection and the Competitive Dynamics of Firm Innovation

This paper examines how constraining resource adjustment affects a firm’s ability to innovate. In response to losing competitiveness, laggard firms release obsolete resources and increase their experimentation with new resources. Limiting the pace and efficiency at which they can do so may impede their ability to innovate and challenge leader firms. I explore these ideas empirically by exploiting the staggered adoption of employment protection laws by U.S. state courts that increase the cost of dismissing employees. I find that increases in employment protection result in fewer and less impactful patents by laggard firms. The effect is largely driven by a decrease in innovations that require significant resource adjustments, and is concentrated in sectors that require more frequent resource adjustments, such as those with high technological velocity or employee turnover. I also find that employment protection decreases the firing and hiring of inventors as well as the acquisition of external patents, further supporting the argument that constraining resource adjustment impedes firm innovation.

Software Patents as a Currency, Not Tax, On Innovation

Software innovation is transforming the US economy. Yet our understanding of how patents and patent transactions support this innovation is limited, in part because of a lack of public information about patent licenses and sales. Claims about the patent marketplace, for example, extolling the virtues of intermediaries like non-practicing entities, or questioning the social utility of ex post patent licenses, tend not to be grounded in empirical evidence. This article brings much-needed data to the policy debate by analyzing transactional data from several proprietary databases of patent licenses and transfers, and reporting several novel findings. First I find that, despite recent legal developments that have reduced the enforceability of software patents, the market for software patents is remarkably robust and actually grew, not declined, from 2012 to 2015. I speculate that the strength of this demand is driven by the defensive, not only offensive, value of software patents, the importance of software business models, and bargain shopping in the acquisition of patents. Second, I explore the extent to which software patent transfers support the transfer of technology as opposed to supporting just the transfer of liability, or freedom from suit, with mixed results. I find that the majority of material software licenses reported by public companies to the SEC from 2000-2015 (N=245), which are non- representative of licenses in general, to support true technology transfer. However, I also find evidence that in recent years, large numbers of software patents apparently been sold to avoid litigation or provide general operating freedom, rather than to access specific technologies. Software patents transferred between public companies between 2012 and 2015 were two to three times more likely to go from an older company to a younger company, and from a higher revenue to a lower revenue public company. This finding lends some support to the perception that software patents are a tax on innovation that younger, lower revenue companies must pay to older firms with higher revenue.

Buyers in the patent auction market: Opening the black box of patent acquisitions by non-practicing entities

In this paper we conduct an exploratory study on the activity of NPEs as buyers of patents in the auction marketplace. The analyses are based on a comprehensive dataset covering all patent auctions held by Ocean Tomo until the end of 2008, matched with information drawn from patent databases and the USPTO reassignment register. The results indicate that the probability that a traded patent is acquired by a NPE rather than a practicing entity increases in the presence of triadic family members and backward citations, while it decreases in the number of inventors and when the invention represents an extensive technological advance (proxied by the originality index). If we disaggregate the category of NPEs, we find that, with respect to manufacturing buyers, defensive aggregators purchase patents which have, on average, a narrower technological scope, a higher technical merit, a lower number of inventors and a longer residual life. Instead, the super-aggregator Intellectual Ventures (I.V.) assigns a higher value, with respect to practicing firms, to patents that are triadic, have a longer time to expiration, have a lower number of inventors and have a higher number of assignees. Patents purchased by both defensive aggregators and I.V. also report higher values of forward citations and residual life than patents acquired by other NPEs.

Access to Costly New Hepatitis C Drugs: Medicine, Money, and Advocacy.

Hepatitis C affects >3 million people in the United States, and often leads to end-stage liver disease or death. In 2014, several new drugs to treat hepatitic C virus received US Food and Drug Administration approval, with remarkable cure rates exceeding 90%. Medicaid, however, is rationing these drugs, and other insurers have restricted coverage due to their exorbitant costs and the large size of the population in need. These access barriers and disparities have resulted in national patient advocacy mobilization, US congressional inquiry, and legal challenges. The US Department of Health and Human Services has been urged to intervene. We propose the establishment of a federal program, analogous to AIDS Drug Assistance Programs, to reduce access barriers and facilitate focused price negotiations. The federal government may further undertake a nonvoluntary acquisition of the pharmaceutical patents pursuant to federal statutory authority and principles of eminent domain. Projections indicate this proposal could lower costs by 90% and eliminate rationing.

Daňová optimalizace při prodeji nehmotného majetku

During the implementation of their activities on the market, a lot of companies deal with the issues of increasing their market shares, the know-how improvement, gaining competitive advantage over their competitors, etc. One of the possibilities how to solve out the said problems is for instance the acquisition of know-how, databases, software, and patents which will provide the company with the competitive advantage from another company. At the acquisition of the assets, there is a great space for the tax optimisation, i.e. how to purchase (sell) the assets with the minimum tax burden.

Government support for SME innovations in the regional industries: The case of government financial support program in South Korea

This study explores the impact of governmental support policies on the innovation of SMEs in the regional strategic industries in South Korea. We use the technological development assistance funds as a proxy for governmental support policies for SMEs in the regional industries in Korea. The innovation of SMEs is measured by technological innovation: patent, utility model, trademark, and new design registrations. Before empirically testing the impact of governmental support policies on the innovation of SMEs, this study reviews the literature concerning the innovation and the governmental support policies of SMEs in regional industries. Results from empirical models, which simultaneously control for factors which were thought to affect the innovation of regional SMEs, indicate that a positive relationship exists among the technological development assistance by the Korean government and patent acquisitions and new design registrations of regional SMEs. Networks with universities also have a positive relationship with patent acquisitions and new design registrations of regional SMEs. This study suggests there is an importance to governmental financial aids for regional SME innovations, and there is an importance to the need to build a strong social relationship in today's networked economy.

IP Strategy: The impact of litigation and internal R&D on the external acquisition of IP

IP strategy has become a core part of modern operations of technology firms. Firms looking to build an IP portfolio have two choices internal development option and external acquisition option. In this paper we study the second option – the inorganic external acquisition of patents. Using a resource based view of the firm we suggest that as patent litigation and internal patenting goes up so does the external acquisition of patents. The effect of this litigation on acquisition of patents is mitigated by the internal development of patents. We find support for our hypotheses based on data from the pharmaceutical industry.

Do patent acquisitions pay off?

This paper analyzes the effect of patent acquisitions on firm performance. The unique dataset employs information for 313 high- tech firms. Results suggest that acquired patents do not influence sa...

Patent Wars: How the Government Can Best Address Anticompetitive Patent Accumulation by Updating the Horizontal Merger Guidelines

On February 13, 2012, the European Commission approved Google’s acquisition of Motorola Mobility. On the same date, the Department of Justice (DOJ) announced it was closing investigations of Google’s acquisition of Motorola and acquisitions made by Microsoft, Apple and Research in Motion. Many in the press have reported that Google’s acquisition of Motorola is a defensive measure against a wave of attacks against Google’s Android operating system. Google itself has publicly stated that Android was under a systematic legal attack by Microsoft, Apple and other companies and that recent patent acquisitions by these companies posed a continuing threat. Not surprisingly, Google paid a 73% premium for Motorola, even though the average premium for acquisitions in the wireless equipment industry has been 32% in the past five years. Patents are becoming an ever increasing part of the battle for the smartphone and tablet market. A smartphone produced today might involve as many as 250,000 patent claims. Many of these patents can be overlapping and overbroad. Patent infringement suits drive up legal costs for competitors and result in new licensing fees that increase per unit costs. License holders charge different licensing fees to some competitors versus others in order to get a competitive advantage. Patent pools, where competitors pool together patents, can lead to collusive and other anticompetitive behavior. The types of activities that antitrust law is meant to protect against are already happening in today’s patent war. The decision of the DOJ to close its investigations of patent acquisitions postpones the greater issue of how patent law and antitrust law will interact in the future. By not addressing this conflict, the DOJ is allowing patent law to carve out large exceptions to antitrust law that will hurt competition. This note seeks to make the case that the DOJ and FTC should become proactive by addressing patent acquisitions in the Horizontal Merger Guidelines.

Effects of new formulation strategy on life cycle management in the US pharmaceutical industry

This research discusses the role of new formulation strategies on life cycle management in the US pharmaceutical industry and evaluates its effect on the market life of existing drug products. We constructed a method to quantitatively measure the life cycle extension period of new formulation pharmaceuticals, including censored cases, wherein the generic drug has not yet been approved and the innovator drug is surviving in the market. We employed 180 new formulation approvals for which Abbreviated New Drug Application approvals were granted for new molecular entities. We undertook a comprehensive and quantitative analysis of how long these new formulation pharmaceuticals are able to prevent the entry of generic pharmaceuticals into the US market after the end of the regulatory exclusivity period. The results showed that among the oral formulations, dosage forms that require advanced manufacturing technology, such as “Extended/Delayed Release,” have significantly extended the life cycle extension period over the past 20 years. In addition, the acquisition of formulation-related patents protecting products was observed to extend the life cycle extension period significantly. These research outcomes can help business strategists in the pharmaceutical industry to take advantage of already marketed new molecular entities as part of the life cycle management strategy and can help generic drug companies adapt to the strategies of innovator drug companies.