Did 'Patent Trolling' Change the Incremental Ability of Patents Awarded to Predict Future Cash Flows From Operations?

Abstract

This study examines whether companies’ patents obtained had less impact on future operating cash flows during the period of most patent troll litigation, 2010 to 2014. We conduct analyses using cash flow predictive models and observations from companies that had consistently obtained patents granted by the U.S. Patent and Trademark Office. Regression results provide evidence to support our hypothesis that the value of the number of patents obtained in predicting operating cash flow was lower from 2010 to 2014, than before 2010. From a policy standpoint, our findings support recent legislative and judicial actions that have limited the ability of entities to file patent infringement lawsuits.

Keywords: patents, trolls, infringement lawsuits, cash flow prediction

JEL Classification: K11, K41, M13, M41, M48