Intellectual Property Protection Lost and Competition: An Examination Using Large Language Models
83 Pages Posted: 14 Mar 2022 Last revised: 6 May 2023
There are 2 versions of this paper
Intellectual Property Protection Lost and Competition: An Examination Using Large Language Models
Intellectual Property Protection Lost and Competition: An Examination Using Machine Learning
Date Written: November 17, 2022
Abstract
We examine the impact of lost intellectual property protection on innovation, competition, acquisitions, lawsuits and employment agreements. We consider firms whose ability to protect intellectual property (IP) using patents is weakened following the Alice Corp. vs. CLS Bank International Supreme Court decision. This decision has impacted patents in multiple areas including business methods, software, and bioinformatics. We use state-of-the-art large language models (LLMs) to identify firms’ existing patent portfolios' potential exposure to the Alice decision. While all affected firms decrease patenting post-Alice, we find an unequal impact of decreased patent protection. Large affected firms benefit as their sales and market valuations increase, and their exposure to lawsuits decreases. They also acquire fewer firms post-Alice. Small affected firms lose as they face increased competition, product-market encroachment, and lower profits and valuations. They increase R&D and have their employees sign more nondisclosure agreements
Keywords: Patents, Intellectual property protection, Innovation, competition, litigation
JEL Classification: O31, O34, D43, F13
Suggested Citation: Suggested Citation