PATENT OWNERSHIP FRAGMENTATION AND MARKET VALUE: AN EMPIRICAL ANALYSIS
Abstract
Patent ownership Fragmentation following the U.S. pro-patent shifts has built overlapping intellectual property rights or patent thickets. This has made the use of others’ innovations costlier due to transaction costs, licensing fees, and hold-up. Using panel data on 2,441 public U.S. manufacturing firms for 1976–2002, I find that patent thickets lower firms’ expected profit and their market value. I also find that firms with a large patent portfolio experience a smaller effect, likely because stronger bargaining position lowers the hold-up likelihood. There is no systematic time effect from patent thickets on firms’ market value with a large patent portfolio size.
This paper is based on a chapter of my PhD dissertation, while employs updated data. I thank Mikko Packalen, Lutz Busch and Anindya Sen for advice.
