Trading and enforcing patent rights

Alberto Galasso, Mark Schankerman, Carlos J. Serrano

Research output: Contribution to journalArticlepeer-review

Abstract

We study how the market for innovation affects enforcement of patent rights. We show that patent transactions arising from comparative advantages in commercialization increase litigation, but trades driven by advantages in patent enforcement reduce it. Using data on trade and litigation of individually owned patents in the United States, we exploit variation in capital gains tax rates across states as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that trade reduces litigation on average, but the impact is heterogeneous. Patents with larger potential gains from trade are more likely to change ownership, and the impact depends critically on transaction characteristics.

Original languageEnglish
Pages (from-to)275-312
Number of pages38
JournalRAND Journal of Economics
Volume44
Issue number2
DOIs
StatePublished - Jun 2013
Externally publishedYes

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