Patent Market Research Articles

Property Rights and Frictions in the Sale of Patents

Patent scope is central to the sale of ideas, which can spur economic growth and provide significant gains from trade. Awarding an inventor a patent on a new idea partially solves a commitment problem that would otherwise prevent the inventor from selling the idea. (Arrow, 1962). In the absence of a patent, a prospective buyer cannot credibly promise not to steal the idea should the inventor reveal it, while the inventor cannot credibly promise to reveal the idea should the prospective buyer pay for it. A firm's ability to use a particular patent to overcome this transactional hurdle derives from two factors: (1) the scope of the patent's legal right to exclude and (2) the effectiveness of that legal right in providing market exclusivity. I first show that a broader patent is more likely to be sold by employing a causal instrument that provides a plausibly exogenous shock to the scope of a patent's legal right to exclude, holding fixed the underlying idea. I then examine variation in the effectiveness of the right by interacting the instrument with endogenous firm, industry, and market characteristics. These results shed light on how firms profit from innovation and also connect the important but understudied market for patents, widely believed to be illiquid and inefficient, with fundamental research about how markets function in other contexts.

Patent Ownership Fragmentation and Market Value: An Empirical Analysis

A higher fragmentation of patent ownership following the recent U.S. pro-patent shifts has built overlapping property rights or patent thickets for firms with cumulative innovations. This has made the use of other firms' innovations costlier, due to higher transaction costs, licensing fees, and the possibility of hold-up. Using a panel data on 2,441 publicly traded U.S. manufacturing firms from 1976 to 2002, I quantify costs of the fragmentation and find that patent thickets lower firms' expected profit and, consequently, their stock market valuation. I also find that firms with a large patent portfolio size experience a smaller effect, likely because stronger bargaining position lowers the occurrence of the hold-up problem for these firms. In addition, there is no systematic time effect from patent thickets on firms' market value with a large patent portfolio size.

Effects of patent indicators on national technological level: concentrated on mobile communication, network, and convergence technologies

Several countries have invested massive amounts of R&D expenditures into convergence, mobile communication and network technologies which form the basis of modern industrial innovation. However, although R&D investment is directly related to the economic growth at the country level, whether such large-scale investment actually contributes to increasing the technological levels of countries is unclear. Thus objective evidence on whether this astronomical investment should be continued is limited. This study seeks to validate whether four patent indicators (patent activity, patent intensity, patent market power, patent citation) influence the technological levels of 11 countries (Korea, the United States, Japan, China, Germany, Finland, France, the United Kingdom, Italy, the Netherlands, Sweden) based on patent indicators for convergence, mobile communication, and network technologies. Based on the patent indicator that influences each country, a practical model for evaluating technological-level is then proposed.

Buy, Keep, or Sell: Economic Growth and the Market for Ideas

An endogenous growth model is developed where each period firms invest in researching and developing new ideas. An idea increases a firm's productivity. By how much depends on the technological propinquity between an idea and the firm's line of business. Ideas can be bought and sold on a market for patents. A firm can sell an idea that is not relevant to its business or buy one if it fails to innovate. The developed model is matched up with stylized facts about the market for patents in the United States. The analysis gauges how efficiency in the patent market affects growth.

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.

Shooting Ourselves in the Foot to Kill a Fly? Patent Enforcement and Market for Technology

This study examines the impact of patent enforcement strength on firms’ incentives to patent and out-license. In addressing a patent dispute between eBay vs. MercExchange, in 2006, a precedential U...

Bio3 Research: An Entrepreneurial Process in the Market for Patents

This case concerns Bio3 Research, a small biotechnology company established in Italy in 2001 that focuses on cardiovascular disorders, connective tissue regeneration, and renal disorders. The case reports on Dr. Pilato, founder and chief executive officer of Bio3 Research, while reflecting with his chief operating officer on the investments required to finance his patents and products pipeline. The case offers a discussion around the entrepreneurial process of Bio3 Research, from opportunity identification to opportunity development and exploitation. The case then reveals Bio3 Research's business model and examines its activities and management practices in the patent market. In a recessive world economy, Bio3 Research has an exciting portfolio of patents and products in high–growth markets but must decide between financial options, as the company cannot exploit all of these opportunities on its own.

Effect of Non-Practicing Entities on Innovation Society and Policy: An Agent Based Model and Simulation

Effect of Non-practicing entities (NPE) on innovation society has been a controversial issue owing to their having both positive and negative impacts. However, measuring the net effect as well as finding ways to reduce the probable negative effects of the NPEs has been a challenge. In this paper, we propose an agent-based model of the patent market to address the issue. We conduct a simulation to test whether NPEs produce more harm than good. Further, a simulation evaluates the efficacy of possible legislative options to control NPEs’ undesirable effects, which are being discussed in the U.S congress. Our result concludes that the negative effects of NPEs are likely to outweigh their potential benefits. In addition, it provides a first look at the effectiveness of each policy in relieving the NPE’s negative effect. We provide a quantitative ground for policy makers to discuss policy options regarding the NPE issue and a guideline for implementation of such policies.

Patent Markets: A Framework for Evaluation

Patents have become financial assets, in both practice and theory. A nascent market for patents routinely produces headline-grabbing transactions in patent portfolios, and patent assertion entities frequently defend themselves as sources of liquidity essential for a patent market to function. Much of the discourse surrounding these developments assumes that a robust, liquid market for patents would improve the operation of the patent system. In this Essay, I challenge that assumption and systematically assess the cases for and against patent markets. I do so by taking seriously both the underlying innovation promotion goal of the patent system and the lessons of financial economics, and asking what might be the effects of a market for patents that looked roughly like other familiar markets for stocks, real estate, or secondhand goods. I conclude that, like much in patent law, the effects of robust patent markets are likely to vary with specific technological and business contexts. When there is a close fit between patents and useful technologies, a patent market can support a market for technology that aids in connecting inventors with developers and sources of capital for commercialization. But when that fit breaks down, market pricing could favor litigation over commercialization. Similarly, a liquid patent market might help to allocate the risks of innovation and of patent infringement to the parties best able to bear it, but a kind of moral hazard familiar to the market for subprime mortgages could lead not to more innovation but to more patents, thereby increasing the overall risk in the system. This analysis suggests that we are having the wrong conversation about patent markets. Rather than assuming their utility and asking how to improve them, we should be undertaking empirical research to determine the circumstances in which they will or will not work and exercising caution in invoking the logic of markets in policy debates about the contours of the patent system.

Life Cycle Analysis of the Optical Disc Industry Market Innovation and Development

The rapid advancement of the global optical disc industry results from systematic changes during the product life cycles of digital audio-visual technology. Compact discs (CD) and Digital Versatile Disc (DVD) sales reached record highs in 2004 and 2006 respectively, and the markets continue to shrink as CDs, DVDs, and related consumer electronic products have entered the mature stage of development following the entry of Blu-ray DiscTM (BD) products. This research explores the history, evolution, and systematic innovation driven by consumer demands for these products. The research provides a life cycle analysis of technology and market trends for the optical disc industry. Logistic curves are used to model the patent statistics and market values of DVD and BD technologies to document data trends from the mid-1990s till now. The results show that BD technology patent filings rapidly reached the decline point two years after DVD technology matured. The results also show that systematic innovation of optical disc technology is consumer demand driven with BD technology forecasted to replace DVDs in a very short period of time. Technology and market growth curves are used to model the entry times of DVDs and BDs into the mature stage of the product life cycle. The patent based forecasts indicate that new DVD entrants should be cautious since there will be decreasing economic benefits as the new BD technologies gain popularity and market share. The most valuable contribution of this research is the use of the quantitative logistic analytic techniques for technology forecasting incorporating both patent and marketing data. The methodology enables the integrated analysis of technology and marketing intelligence and can be applied to other industry domains and assist the allocation of research funding in their systematic innovation development.

Moderating effect of duration of patent examination on market value of firms: evidence from Taiwanese publicly traded firms

Patents are acknowledged as intellectual assets that can establish legal appropriability and increase profits for firms; thus, previous literature has focused on the relationship between patent assets and market value of firms. Few studies note the uncertain examination duration encountered by patents. Therefore, this study tests the moderating effect of duration of patent examination on market value of firms by extending the hedonic model presented by Griliches and the framework of profit from innovation by Teece. The sample comprises firm-level financial and patent data from Taiwanese publicly traded firms in the electronics, computer and communications industries. The analytical results support our hypothesis that there is an inverse U-shaped moderating effect of examination duration on the relationship between patent assets and market value of firms. Based on the results, this study offers suggestions to knowledge management practitioners.

Patent Trolls, Litigation, and the Market for Innovation

We examine whether non-practicing entities (NPEs) have a superior ability to pursue patent lawsuits. Comparative advantages in patent enforcement allow vertical specialization on licensing, and serve as a source for gains from trade on the market for patents, especially for patents sold by small innovators. Our theoretical model predicts that cases with better abled patentees resolve faster than cases with opponents of equal ability. Our empirical analysis of a sample of US patent litigation cases shows this duration pattern for NPE cases. We observe the same duration pattern for large firm patentees; firms with access to a similar legal expertise.

SIPO Patent Databases - Focus on Searching China Medicine Patents

With more than 13 million patent applications submitted before SIPO, China has become one of the most important patent markets all over the world. Globally competing companies just can't afford not to pay attention to China patents. In order to facilitate the public use of patent information, SIPO has made great efforts to provide the public with user friendly and functional patent databases for searching patents. The overall China patent status is introduced to reflect the growing China patent market. Internal SIPO patent search platforms used by SIPO examiners are briefly introduced, while external SIPO databases are described in more details, including external PSSS and CPRS, CNIPR and a specialized China medicine patent database, CHMP. Due to the unique challenges for medicine patent search, case studies are used to illustrate patent searching on CHMP, for both the old and new version. Users will be able to manipulate those SIPO patent platforms following instructions illustrated in this paper and make better use of patent information.

Integrated marketing communications in the commercialisation of intellectual property

Integrated marketing communications (IMC) is an approach to increase sales of a product by concerted actions in various promotional channels that achieve synergy. IMC has been applied extensively to consumer products. This paper shows that IMC is a valuable tool for the commercialisation of intellectual property (IP), e.g., patents and know-how, in a business to business (B2B) setting, that is for the commercialisation of patents and other types of IP. The value of IP depends strongly in its perceived value or utility for the business-customer, which can be conveyed in an advantageous way bv IMC. Hence, this paper addresses a new strategy for the successful commercialisation of IP. Patent marketing can increase the value of a patent or patent portfolio can be significantly. The business case is the central building block for IMC of intellectual property (IP). An important aspect for inventors is to keep in mind that it is not the technical sophistication of their innovation which brings them success, but its market. Marketing is a key for IP commercialisation.

Extracting value from ipr through patent brokerage

We investigate the role of patent brokers in creating and extracting value from patents. Based on theoretical discussions, distinctive patent market conditions are associated with specific benefits of patent brokers. We provide a conceptual model to frame the role of patent brokers. We identify patent market dimensions that are likely to affect broker selection and argue why companies should carefully select patent brokers. We conclude with an outline of implications and suggestions for empirical research design in this field.

Buy, Keep or Sell: Economic Growth and the Market for Ideas

An endogenous growth model is developed where each period firms invest in researching and developing new ideas. An idea increases a firm's productivity. By how much depends on how central the idea is to a firm's activity. Ideas can be bought and sold on a market for patents. A firm can sell an idea that is not relevant to its business or buy one if it fails to innovate. The developed model is matched up with stylized facts about the market for patents in the U.S. The analysis attempts to gauge how efficiency in the patent market affects growth.

Why Patent Law Doesn't Do Innovation Policy

Calls for patent law to take on a more explicit innovation policy agenda have recently increased in urgency. There is however a considerable difference between incentive to invent and incentive to innovate in terms of outcome. Institutional dynamics in patent systems based on the incentive to invent premise constrict rationality and decision-making capability to the extent that an injection of externally devised ‘innovation policy’ seems impossible unless also accompanied by far reaching institutional changes. In both US and Europe technology-specific legal standards in patent law and market specific economic analysis in competition law are a natural point of congruence when considering existing institutional dynamics that support innovation. This short essay looks primarily at European law to analyse the different ways in which patent law is inured to resist the imposition of economic analysis common to competition policy. There are however spaces within current legal rules that lend themselves well to an examination of the sector specific commercial contexts of inventions. These can and ought to be used robustly to better reflect elements of market specific innovation policies.

The Protective Measures of Intellectual Property in Response to Changes in the Patent Market

The Protective Measures of Intellectual Property in Response to Changes in the Patent Market

The drivers of patent transactions: corporate views on the market for patents

In recent years, the proactive management of patents and their exploitation through licensing out and sales transactions have been enhanced by the development of intermediaries and trading platforms. This paper first investigates the main drivers of companies' decisions to engage in patent licensing and sales; then, it examines how improvements in the marketplace for patents and more intense involvement of patent brokers might impact the factors hindering the development of patent transactions. The study's findings are supported by the results found in the scientific literature and by evidence from a survey conducted on a sample of companies involved in patent transactions.

스마트 의류의 기술동향: 특허정보분석을 중심으로

과학기술의 발전 분야의 발전 동향을 신속히 파악하기 위해 기술로드맵을 효율적으로 작성할 필요성이 제기되었다. 이를 위해 논문이나 특허를 이용한 계량정보적 접근이 많이 시도되고 있다. 하지만 의류학에서 이러한 계량정보분석은 거의 이루어지지 않고 있다. 따라서 본 연구는 스마트 의류에 대한 특허정보를 이용한 실증적 정보분석을 통해 스마트 의류의 최근 기술동향 및 향후 기술개발방향을 살펴보았다. 또한 기존의 기술동향 지수와 특허 패밀리로 표시되는 시장확보 지수를 활용하여 국가별, 핵심 분야별 기술개발력과 시장확보력에 대한 분석을 시도하였다. 분석 결과, 스마트 의류의 전체적인 기술개발은 2000년 이후 지속적으로 증가 추세를 나타냈으며, 포트폴리오 분석 결과, 매년 특허건수와 출원인 수가 지속적으로 증가하고 있는 것으로 파악되어 스마트 의류 관련 기술은 현재 발전단계에 있는 것으로 분석되었다. 또한 특허점유율과 시장확보지수를 비교한 결과 전자/정보통신 기술분야가 가장 높게 나타나 상대적으로 선기술 확보 경쟁과 시장 확대 경쟁이 큰 분야로 판단된다. 본 연구에서 제시한 시장확보 지수를 포함한 기술의 경제적 가치 분석 방법은 핵심 기술의 현 위치와 향후 발전 방향을 파악하기 위한 프로세스에 활용될 수 있을 것으로 판단된다. Advancement of science technology, combined with other technologies including smart clothing, enables value added product developments and market creation. Accordingly, it became necessary to identify technology trends promptly and to prepare future technology road map. For this purpose, many bibliometric analysis using thesis and patents have been made. However, few such attempts are made in clothing study. Thus, the study examined the latest technology trends and future technology development directions of smart clothing from empirical bibliometric analysis based on smart clothing patent documents. In addition, comparative analysis was made about the market leadership and technology development capability of core sectors by countries utilizing market reach index expressed as patent families and technology development index. The study revealed that overall smart clothing technology development trends has been continuously increasing since 2000. Also the results confirmed that it is in the development stage from the fact that each year the number of patents and patent applicants in portfolio analysis also has been increasing. In addition, comparative results of patent market share and market reach index, with the highest in electronics/ICT technology sectors, indicated that this is the technology sector with competitive acquisition of comparatively advanced technology and market expansion. The analysis methodology of economic value of technology including the presented market reach index in this report is expected to be utilized in the process to identify the current positioning of core technology and future development direction.