Market Reactions To Patent Infringement Lawsuits In Information Technology Industry

Over the years the number of patent infringement lawsuits in the Information Technology industry has increased tremendously. The increase in patent disputes can be partly attributed to the increase in the number of patents issued. The number of patents issued for software developments alone has risen from 25 in 1970 to 600 in 1991. The total number of patents issued till 1992 was about 9000. The damages awarded to patentees in such litigations is substantial. It is argued that some of these high technology companies are using the intellectual property rights laws as a weapon to thwart competition in their markets. In the US, while the inventor is waiting for the patent on the invention, manufacturers may develop and begin using similar technology, but once the patent has been issued, the inventor can demand the damages from the manufacturer using the technology. Many of the top executives believe that it is beneficial to settle infringement cases than dispute it in a court of law. This view is again raised in the patent infringement dispute between Intel Corp. and AMD Corp., who spent almost $200 million on the patent dispute over several years. To our knowledge no empirical study has been undertaken to study the impact of patent infringement lawsuits on the information technology companies involved. Though markets analysts have suggested that the market value of the firms fluctuates in accordance with the direction of the lawsuit proceedings, no concrete evidence of these effects have been shown in the literature. This study aims to study the impact of the patent infringement lawsuits and the lawsuit decisions on the IT companies involved. The impact on the stock holder returns is used as the empirical evidence of the impact of the litigation on the IT company. Findings of thestudy are expected to provide valuable insights into market perception of the ethical issues in a high technology industry. More specifically, how does the market view the ethical conduct of an IT company? Does it impose a high risk on a company suspectedof unethical conduct in its business strategies?. In addition to the ethical issues involved, the economic viability of fighting a law suit is also examined, i.e., does the market perceive a net benefit or loss to the company as a result of fighting a lawsuit? Does the market perceive a net benefit or loss to the company as a result of the decision made on the law suit?. The findings of the study would be useful to both the policy formulators and managers alik

A Simple Theory of Defensive Patenting

This paper examines innovating firms’ incentives to engage in defensive patenting. It first establishes a “truce equilibrium” in patent enforcement: when litigation is costly, the equal strength of two symmetric parties’ patent portfolios deters any patent disputes along the equilibrium path. This equilibrium behavior generates two benefits of defensive patenting, namely, to prevent licensing outlays and to protect downstream investments. In addition, firms can use patents to coordinate non-contractible investment decisions. Depending on the joint interests, they can either reach a license in order to guarantee high investment incentives, or agree not to grant a license so that investments are deterred by the litigation threat. On the other hand, the strategic patenting concern may generate a bandwagon of patent accumulation, where firms rush to the patent office to get a patent, but the subsequent investment performance is the same as when there is no patent at all. The paper also argues that defensive patenting may weaken the effectiveness of patents as an appropriation scheme. This offers an explanation that the “pro-patent” policy shift in the United States since the 1980s may actually have undermined the incentive power of the patent system

Exploring the Boundaries of Patent Commercialization Models via Litigation

This thesis explores direct patent commercialization via patent assertion, particularly patent infringement litigation, a complex nonmarket activity whose successful undertaking requires knowledge, creativity, and financial resources, as well as a colorable infringement case. Despite these complexities, firms have increasingly employed patents as competitive tools via patent assertions, particularly in the United States. This thesis explores the business models that have been created to facilitate the direct monetization of patents. Since secrecy underpins the patent assertion strategies studied, the thesis is based on rich and enhanced secondary data. In particular, a data chaining technique has been developed to assemble relevant but disparate data into a larger coherent data set that is amenable to combination and pairing with other forms of relevant public data. This research has discovered that one particularly successful business model that employs a leveraging strategy, known as the non-practicing entity (“NPE”), has itself spawned at least two other business models, the highly capitalized “patent mass aggregator” and the “patent privateer.” The patent privateer, newly discovered in this research, is particularly interesting because it provides a way for firms to employ patents to attack competitors by forming specialized NPEs in a manner that essentially expands the boundaries of the firm. This research has also examined plaintiff firm management processes during litigations brought under leveraging and proprietary strategies, the two patent litigation strategies in which firms affirmatively initiate infringement litigations. In particular, this research investigates the commercial contexts that drive patent assertion strategies to explore the effective limits of the patent right in a litigation context. The investigation concludes that a variety of robust business models and management processes may be quite successful in extracting value from patents in the US

How Non-Product-Specific Manufacturing Patents Block Biosimilars

A new class of drugs called biologics has potential to finally cure previously untreatable conditions such as cancer and Alzheimer’s disease. But there is a catch: these innovative drugs are expensive. On average, prices range from $10,000 to$30,000 per year, and the most expensive ones exceed $500,000. The Biologics Price Competition and Innovation Act (“BPCIA”) was passed in 2010 to lower prices by providing a new regulatory pathway in approving biosimilars––copies of brand-name biologics. Yet, the BPCIA’s promised regulation of drug prices has not materialized partly due to brand-name companies’ vast patent portfolios, also known as patent thickets. This Note analyzed all BPCIA patents disputed in BPCIA litigations and found that over half of the asserted patents are manufacturing method patents, many of which were filed years after FDA approval. Given the nonproduct- specific nature of these patents and stringent FDA requirements, these inventions are not only unnecessary, but are also unlikely to be practiced when producing brand-name biologics. Regardless of their actual worth, these patents are extremely valuable to brand-name manufacturers because even a patent of marginal improvement can foreclose biosimilar access entirely. This Note proposes that brand-name manufacturers should be required to disclose related patents at the time of the FDA approval and share the FDA license application with biosimilar manufacturers. Further, Congress should eliminate the availability of injunctive remedies for these problematic assertions of patents

Certain Patents

This Article presents the first in a series of studies of stock market reactions to the legal outcomes of patent cases. From a sample of patents litigated during a 20-year period, we estimate market reactions to patent litigation decisions and to patent grants. These estimates reveal that the resolution of legal uncertainty over patent validity and patent infringement is, on average, worth as much to a firm as is the initial grant of the patent right. Each is worth about 1.0-1.5% excess returns on investment. There are significant differences between such market reactions before and after the establishment in 1982 of the United States Court of Appeals for the Federal Circuit. There are also significant differences among the reactions of patent holders to resolved uncertainty depending on their litigation posture as plaintiffs or defendants. Interestingly, there is no similar effect for appellate decisions relative to trial decisions. The normative implications of these findings proceed, not from the magnitude of the quantitative results — which are statistically meaningful but modest — but rather from our illustration that uncertainty in the value of patent rights is quantifiable and so can be correlated with patentee and litigant behavior in developing patent policy

CIFRA: Challenging the ICT Patent Framework for Responsible Innovation. D2.1: Literature Review

The European Commission. CIFRA: Challenging the ICT Patent Framework for Responsible Innovation. Grant Agreement No.731940. Research and Innovation Action. Call: H2020-ICT-35-201

CIFRA: Challenging the ICT Patent Framework for Responsible Innovation. D3.2: Report on Assessment of Impact of proposed new Framings

The European Commission. CIFRA: Challenging the ICT Patent Framework for Responsible Innovation. Grant Agreement No.731940. Research and Innovation Action. Call: H2020-ICT-35-201

Innovation, Intellectual Property Rights and Non-Practicing Entities in the European Patent Market

I brevetti sono una forma di diritti di proprietà intellettuale particolarmente rilevante per promuovere attività innovative. Un brevetto concede al suo proprietario un temporaneo diritto esclusivo su invenzioni che sono nuove, comportano un passo inventivo e sono suscettibili di applicazione industriale. Con questo diritto, gli inventori possono proteggere le loro idee dall'imitazione e ottenere un ritorno economico dai loro investimenti in ricerca e sviluppo (R&S). Tuttavia, l'uso dei brevetti ha subito una significativa trasformazione, estendendosi oltre lo scopo tradizionale di ricompensare gli sforzi innovativi. In particolare, nel campo delle Tecnologie dell'Informazione e della Comunicazione (ICT), i brevetti sono sempre più utilizzati come strumenti strategici (Blind, 2021). In particolare negli ultimi trent’anni, l'impressionante aumento del numero di brevetti concessi e l’emergere di un vero e proprio mercato dei brevetti hanno creato le condizioni per lo sviluppo di nuovi intermediari nel mercato delle tecnologie (Hagiu e Yoffie, 2013). Le "non-practicing entities"—aziende che non utilizzano i loro brevetti in senso tradizionale, ma si dedicano principalmente alla concessione di licenze e al ricorso al contenzioso legale—sono così emerse come attori di spicco nel mercato dei brevetti (Golden, 2007; Feldman ed Ewing, 2012). Comunemente definite anche "patent assertion entities" (PAE), e talvolta in modo dispregiativo "patent trolls," le NPEs hanno fortemente polarizzato il dibattito accademico e politico. A causa del loro status di entità non produttiva, le NPEs vantano vantaggi specifici rispetto alle entità che al contrario implementano direttamente nei loro prodotti le tecnologie di cui sono proprietarie. Per esempio, le NPEs sono tipicamente al riparo da contro-ingiunzioni per violazione del diritto di proprietà intellettuale e per questo sono state accusate di mettere in pratica strategie di "patent hold-up" (Lemley e Shapiro, 2007), che alcuni sostengono impongano una "tassa sull'innovazione" con effetti negativi sull'innovazione futura (Chien, 2008). Mentre le NPEs sono state ampiamente analizzate nel mercato dei brevetti degli Stati Uniti fin dalla loro comparsa all'inizio degli anni 2000 (Mezzanotti, 2021; Lemley e Zyontz, 2021), è solo di recente che i ricercatori hanno iniziato a studiare la loro presenza nel mercato tecnologico europeo (Fusco, 2013; Love, 2013; Leiponen e Delcamp, 2019). Questa tesi si propone esainare nel dettaglio il fenomeno delle NPEs nel mercato europeo dei brevetti. Il primo capitolo della tesi analizza la letteratura sui modelli di business delle NPEs, adottando un innovativo approccio bibliometrico per un esame sistematico della letteratura esistente guidato dal protocollo PRISMA (Preferred Reporting Items for Systematic Review and Meta-Analysis). Successivamente ad un’analisi critica della letterature rilevante vengono presentati tre casi studio sui modelli di business delle NPEs. Nel secondo capitolo, la presenza delle NPEs nel mercato europeo dei brevetti viene empiricamente analizzata attraverso un nuovo dataset di depositi e acquisizioni di brevetti da parte delle NPEs presso l'Ufficio Europeo dei Brevetti (EPO). In questo capitolo viene inoltre sviluppata una nuova tassonomia, che classifica le NPEs in tre modelli di business: "Litigation," "Portfolio" e "Technology" NPEs. Infine, il terzo capitolo esplora empiricamente l'interazione tra le caratteristiche qualitative del brevetto litigato e la propensione delle NPEs a scegliere giurisdizioni europee specifiche in cui avviare contenziosi (“forum shopping”).Patents are a form of intellectual property rights (IPRs) that are particularly relevant to promoting innovative activities. A patent grants to its owner a temporary exclusive right over inventions that are new, involve an inventive step and are susceptible of industrial application. Relying on this right, inventors can protect their ideas from imitation and gain an economic return from their past investments in research and development (R&D). However, the use of patents has undergone a significant transformation, extending beyond the traditional purpose of rewarding innovative efforts. Especially in the field of Information and Communication Technology (ICT), patents are increasingly used as strategic tools (Blind, 2021). Moreover, over the past three decades, the sharp increase in the number of granted patents and the unprecedented flourishing of patent trading have paved the way for new intermediaries in the market for technology (Hagiu and Yoffie, 2013). Non-practicing entities (NPEs)—firms that do not use their patents in a traditional manufacturing sense, but primarily engage in licensing and enforcement—have emerged as prominent actors on the patent market (Golden, 2007; Feldman and Ewing, 2012). Also referred to as Patent Assertion Entities (PAEs), sometimes pejoratively called "patent trolls," NPEs have greatly polarized the academic and policy debate. Due to their non-manufacturing status, NPEs have unique advantages over operating companies. They are typically shielded from patent infringement counter-claims and have recently faced allegations of employing patent "hold-up" strategies (Lemley and Shapiro, 2007), which some argue it imposes a significant "tax on innovation" with potential negative effects on subsequent innovation (Chien, 2008). While NPEs have been extensively analyzed in the US patent market since their emergence in the early 2000s (Mezzanotti, 2021; Lemley and Zyontz, 2021), it is only recently that researchers have started to investigate their presence in the European technology market (Fusco, 2013; Love, 2013; Leiponen and Delcamp, 2019). This thesis aims to address these research gaps by examining the NPE phenomenon in the European patent marketplace. First, we extensively explore and analyze the literature on NPE business models by adopting a novel bibliometric approach guided by the Preferred Reporting Items for Systematic Review and Meta-Analysis (PRISMA) protocol for systematic literature reviews. In addition, we will integrate three relevant NPE business models case studies. Second, we empirically investigate the presence of NPEs in the European patent market through a brand-new dataset of NPE patent filings and acquisitions at the European Patent Office (EPO). Furthermore, we develop an original taxonomy, thus categorizing NPEs into three business models: "Litigation," "Portfolio" and "Technology" NPEs. Finally, we empirically explore the interplay between the quality characteristics of the asserted patent and the propensity of NPEs to choose specific European jurisdictions where to initiate litigation (forum shopping)

Open Source Software: From Open Science to New Marketing Models

-Open source Software; Intellectual Property; Licensing; Business Model.