Non-Practicing Entities: Enforcement Specialists?
36 Pages Posted: 13 Apr 2014 Last revised: 21 May 2016
Date Written: May 20, 2016
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.
Keywords: non-practicing entities, litigation, patents, innovation
JEL Classification: K0, K41, O34
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