Abstract

http://ssrn.com/abstract=1912253
 
 

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Trading and Enforcing Patent Rights


Alberto Galasso


University of Toronto - Rotman School of Management; University of Toronto - Strategic Management

Mark A. Schankerman


London School of Economics and Political Science; Centre for Economic Policy Research (CEPR)

Carlos J. Serrano


Universitat Pompeu Fabra, Barcelona GSE; Bank of Spain - Research Department; University of Toronto - Rotman School of Management, RIIB; National Bureau of Economic Research (NBER)

August 18, 2011


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. The impact of trade on litigation is heterogeneous, however. Patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient. We also show that the impact of trade on litigation depends on characteristics of the transactions.

Number of Pages in PDF File: 65

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Date posted: August 20, 2011 ; Last revised: October 28, 2014

Suggested Citation

Galasso, Alberto and Schankerman, Mark A. and Serrano, Carlos J., Trading and Enforcing Patent Rights (August 18, 2011). Available at SSRN: http://ssrn.com/abstract=1912253 or http://dx.doi.org/10.2139/ssrn.1912253

Contact Information

Alberto Galasso (Contact Author)
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
HOME PAGE: http://www.rotman.utoronto.ca/facbios/viewFac.asp?facultyID=alberto.galasso
University of Toronto - Strategic Management ( email )
105 St George Street
Toronto, ON M5S 1L2
Canada
Mark A. Schankerman
London School of Economics and Political Science ( email )
Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7518 (Phone)
+44 20 7831 1840 (Fax)
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Carlos J. Serrano
Universitat Pompeu Fabra, Barcelona GSE ( email )
Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
HOME PAGE: http://www.econ.upf.edu/~cserrano
Bank of Spain - Research Department ( email )
Alcalá 48
Madrid, 28014
Spain
University of Toronto - Rotman School of Management, RIIB
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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