The Patent Troll: Benign Middleman or Stick-Up Artist?

56 Pages Posted: 28 Mar 2019

See all articles by David Abrams

David Abrams

University of Pennsylvania Law School

Ufuk Akcigit

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Center for Economic and Policy Research (CEPR)

Gokhan Oz

Analysis Group, Inc.

Jeremy Pearce

University of Chicago

Multiple version iconThere are 3 versions of this paper

Date Written: March 24, 2019

Abstract

How do non-practicing entities (“Patent Trolls”) impact innovation and technological progress? We employ unprecedented access to NPE-derived patent and financial data and a novel model to answer this question. We find that NPEs tend to acquire litigation-prone patents from small firms and acquire patents less core to the seller’s business. When NPEs license patents, those that generate higher fees are closer to the licensee’s business and more litigation-prone. More-over, downstream innovation drops when patents are acquired by NPEs. Quantitatively, the overall impact of NPEs depends on the share of infringements that come from non-innovating producers.

Keywords: non-practicing entity, NPE, patent assertion entity, PAE, patent troll, innovation, patent litigation

JEL Classification: O31, O34

Suggested Citation

Abrams, David S. and Akcigit, Ufuk and Oz, Gokhan and Pearce, Jeremy, The Patent Troll: Benign Middleman or Stick-Up Artist? (March 24, 2019). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2019-51 . Available at SSRN: https://ssrn.com/abstract=3361215 or http://dx.doi.org/10.2139/ssrn.3361215

David S. Abrams

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

Ufuk Akcigit (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

HOME PAGE: http://www.ufukakcigit.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Center for Economic and Policy Research (CEPR) ( email )

London
United Kingdom

Gokhan Oz

Analysis Group, Inc. ( email )

111 Huntington Avenue
10th floor
Boston, MA 02199
United States

Jeremy Pearce

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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