On the Legal Protection and Value of Novel Designs: Evidence from Egyptian Goddess v. Swisa

41 Pages Posted: 5 May 2020

See all articles by Tian Heong Chan

Tian Heong Chan

Emory University - Goizueta Business School

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Kevin Tseng

Federal Reserve Bank of Richmond

Date Written: April 13, 2020

Abstract

In this paper, we empirically examine how the strengthened legal protection of novel designs prevents mimicking behaviors and thus enhances the economic value of novel designs and their assignees. We use the decision of the Federal Circuit Court of Appeals in Egyptian Goddess, Inc. v. Swisa, Inc. as an unexpected regulation change that prevented accused infringers from using the “point-of-novelty” test to defend themselves, which enhanced the protection of design patents, especially intricate ones. After this decision, we show that intricate designs are better protected than simple designs and are less mimicked by subsequent designs. Moreover, we show that stock market reactions to grants of intricate design patents are significantly more positive than reactions to grants of simple design patents after this decision. Finally, we show that 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

Suggested Citation

Chan, Tian Heong and Hsu, Po-Hsuan and Tseng, Kevin, On the Legal Protection and Value of Novel Designs: Evidence from Egyptian Goddess v. Swisa (April 13, 2020). Available at SSRN: https://ssrn.com/abstract=3574702 or http://dx.doi.org/10.2139/ssrn.3574702

Tian Heong Chan

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

Kevin Tseng (Contact Author)

Federal Reserve Bank of Richmond ( email )

530 East Trade St
Charlotte, NC 28202
United States
704-358-2110 (Phone)

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