Intellectual Property Protection Lost and Competition: An Examination Using Large Language Models

83 Pages Posted: 14 Mar 2022 Last revised: 6 May 2023

See all articles by Utku Acikalin

Utku Acikalin

TOBB University of Economics and Technology

Tolga Caskurlu

University of Amsterdam Business School

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

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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

Acikalin, Utku and Caskurlu, Tolga and Hoberg, Gerard and Phillips, Gordon M., Intellectual Property Protection Lost and Competition: An Examination Using Large Language Models (November 17, 2022). FEB-RN Research Paper No. 33/2025, Tuck School of Business Working Paper No. 4023622, Available at SSRN: https://ssrn.com/abstract=4023622 or http://dx.doi.org/10.2139/ssrn.4023622

Utku Acikalin

TOBB University of Economics and Technology ( email )

Faculty of Economics and Administrative Sciences
Söğütözü Cad. 43,
Ankara, Cankaya
Turkey

Tolga Caskurlu

University of Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018WB
Netherlands

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

HOME PAGE: http://faculty.marshall.usc.edu/Gerard-Hoberg/

Gordon M. Phillips (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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