Trends in Private Patent Costs and Rents for Publicly-Traded United States Firms

52 Pages Posted: 12 Jun 2013 Last revised: 24 May 2018

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Peter Neuhäusler

Fraunhofer Institute for Systems and Innovation Research ISI ; Berlin Universtity of Technology

John L. Turner

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Jonathan W. Williams

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Date Written: May 23, 2018

Abstract

We use detailed data to estimate the private costs and private rents of United States patents for publicly-traded firms. In analyzing costs, we first introduce a novel theoretical model to interpret our estimates. We then combine lawsuit data from Derwent Litalert with non-practicing entity (NPE) lawsuits collected by Patent Freedom, and use an event-study approach to estimate losses suffered by alleged infringers during 1984-2009. To estimate rents, we combine patent data from the USPTO and EPO with financial data from COMPUSTAT, and use market-value regressions to estimate the value of patent rents for publicly-traded US firms during 1979-2002. We find that private costs exceed private rents during 1999-2000 and the trend in costs is sharply higher. Costs also exceed forecasts of rents for 2005-09. A surge in the number of NPE lawsuits contributes to the increase in the gap.

Keywords: event study, market-value regression, patent, litigation, non-practicing entities, research and development

JEL Classification: K2, O3

Suggested Citation

Bessen, James E. and Neuhäusler, Peter and Turner, John L. and Williams, Jonathan W., Trends in Private Patent Costs and Rents for Publicly-Traded United States Firms (May 23, 2018). Boston Univ. School of Law, Public Law Research Paper No. 13-24; Boston Univ. School of Law, Law and Economics Research Paper No. 13-24. Available at SSRN: https://ssrn.com/abstract=2278255 or http://dx.doi.org/10.2139/ssrn.2278255

James E. Bessen (Contact Author)

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Peter Neuhäusler

Fraunhofer Institute for Systems and Innovation Research ISI ( email )

Breslauer Str. 48
Karlsruhe, 76139
Germany

Berlin Universtity of Technology ( email )

Straße des 17
Berlin
Germany

John L. Turner

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

Jonathan W. Williams

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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