The Value of Certainty in Intellectual Property Rights: Stock Market Reactions to Patent Litigation.

39 Pages Posted: 16 Nov 2006

See all articles by Alan C. Marco

Alan C. Marco

Georgia Institute of Technology - School of Public Policy

Date Written: November 15, 2005

Abstract

Using a sample of patents litigated between 1977 and 1997, I estimate stock market reactions to patent litigation decisions and to patent grants. I find that the resolution of uncertainty over validity and infringement is worth as much to the firm as the initial patent right. Each is worth about 1 to 1.5% excess returns. Additionally, I find that there are significant differences pre and post-1982 with the establishment of the Court of Appeals for the Federal Circuit. I also find that there are significant differences in reactions for plaintiff patent-holders and defendant patent-holders. Interestingly, there is no similar effect for appellate court decisions relative to the district court. To my knowledge, this is the first study that measures the stock market reactions to legal outcomes of patent cases. The results have important policy implications.

Keywords: event studies, patents, patent litigation

JEL Classification: G14, L0, O31, O32

Suggested Citation

Marco, Alan C., The Value of Certainty in Intellectual Property Rights: Stock Market Reactions to Patent Litigation. (November 15, 2005). Available at SSRN: https://ssrn.com/abstract=945009 or http://dx.doi.org/10.2139/ssrn.945009

Alan C. Marco (Contact Author)

Georgia Institute of Technology - School of Public Policy ( email )

685 Cherry St.
Atlanta, GA 30332-0345
United States

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