Design Patent Protection, Imitation Behaviors, and Market Value: Evidence from Egyptian Goddess v. Swisa
49 Pages Posted: 5 May 2020 Last revised: 24 Dec 2020
Date Written: August 28, 2020
We examine how an unexpected regulation change strengthened legal protection of design patents, thereby preventing mimicking behaviors and enhancing their economic value. Using an unexpected decision of the Federal Circuit Court of Appeals, we show that more intricate designs (which were more likely to be mimicked before) suffer less imitation afterwards. Stock market reactions to grants of intricate design patents also increase more than reactions to grants of simple design patents after this decision. The market values of firms with more intricate design patents also increase significantly after the decision. Moreover, such positive reactions are more pronounced among firms facing fiercer product market competition and among firms previously involved in design patent litigation.
Keywords: design innovation, patent system, market performance, firm strategy, organization and behavior
JEL Classification: G18, K11, L51, O34
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