Alan C. Marco

The Role of Patent Rights in Mergers: Consolidation in Plant Biotechnology

Few micro-level empirical papers have addressed the impact of the patent system on industry structure. Using firm-level patent data for public and private firms in plant biotechnology, we develop a measure of patent enforceability. Duration models show that patent statistics are a useful predictor of the timing of merger activity. We find that patent enforceability is an important factor influencing the likelihood of mergers. Mergers in plant biotechnology may be partially motivated by the enforcement of patent rights when firms have overlapping technologies; some of the merger activity may be explained by attempts to avoid mutually blocking technology, as exemplified in the case of Roundup Ready corn.

Lotto nothing? The budgetary impact of state lotteries

Lottery revenues are often touted as an independent revenue source for states. Using 32 years of state financial data, the fallacy of such thinking is demonstrated. Being the first to control for the self-selection of being a lottery state, it is found that overall tax revenues decline with increased lottery sales. Moreover, it is discovered that this decline is driven by a decrease in revenues from general sales and excise taxes, which is only partially offset by increases in income tax receipts. Such findings are attributed to a combination of behavioural and political responses following the lotterys implementation.

What is the Probability of Receiving a U.S. Patent

What proportion of patent applications filed at the U.S. Patent and Trademark Office (USPTO) are eventually granted? Many experts have suggested that the USPTO approves nearly all applications, blaming this apparent leniency for many problems with the U.S. patent system. To test this assumption, we follow the prosecution histories of 2.15 million U.S. patent applications from 1996 to mid-2013. We find that only 55.8% of the applications emerged as patents without using continuation procedures to create related applications. The allowance rate decreased substantially over time, particularly for applications in the “Drugs and Medical Instruments” and “Computers and Communications” fields. Furthermore, applications filed by small firms were less likely to emerge as patents than those filed by large firms. We discuss the mplications of our findings for inventors, policymakers, and legal scholars.

The Economics of a Centralized Judiciary: Uniformity, Forum Shopping and the Federal Circuit

Abstract In 1982, the U.S. Congress established the Court of Appeals for the Federal Circuit (CAFC) as the sole appellate court for patent cases. This court was created ostensibly to eliminate inconsistencies in the application and interpretation of patent law across federal courts and thereby mitigate the incentives of patentees and alleged infringers to forum shop for a preferred venue. We perform the first econometric study of the extent of nonuniformity and forum shopping in the pre‐CAFC era and of the CAFC’s impact on these phenomena. We find that in patentee‐plaintiff cases the pre‐CAFC era was indeed characterized by significant nonuniformity in patent validity rates across circuits and by forum shopping on the basis of validity rates. We find weak evidence that the CAFC has increased uniformity of validity rates and strong evidence that forum shopping on the basis of validity rates ceased several years prior to the CAFC’s establishment.

The Selection Effects (and Lack Thereof) in Patent Litigation: Evidence from Trials

Abstract Using a selection corrected probit, I estimate the probability that patents will be found valid and infringed at trial. I combine for the first time detailed adjudication data with detailed patent data. I find that the selection effects for validity adjudications and infringement adjudications differ systematically. Additionally, infringement estimates do not appear to suffer from a substantial selection bias. The results highlight the importance of correctly specifying the selection mechanism in policy analysis. In contrast with previous studies, I find that the win rate for patents that go to trial is biased towards 50%. The bias is much more substantial for validity decisions, where I find unconditional win rates of 75% for adjudicated patents and 85% for matched patents. Win rates conditional on adjudication are below 60%.

The Value of Certainty in Intellectual Property Rights: Stock Market Reactions to Patent Litigation.

Using a sample of patents litigated between 1977 and 1997, I estimate stock market reactions to patent litigation decisions and to patent grants. I find that the resolution of uncertainty over validity and infringement is worth as much to the firm as the initial patent right. Each is worth about 1 to 1.5% excess returns. Additionally, I find that there are significant differences pre and post-1982 with the establishment of the Court of Appeals for the Federal Circuit. I also find that there are significant differences in reactions for plaintiff patent-holders and defendant patent-holders. Interestingly, there is no similar effect for appellate court decisions relative to the district court. To my knowledge, this is the first study that measures the stock market reactions to legal outcomes of patent cases.

Patent Claims and Patent Scope

Patent scope is one of the important aspects in the debates over “patent quality.” The purported decrease in patent quality over the past decade or two has supposedly led to granting patents of increased breadth (or “overly broad” patents), decreased clarity, and questionable validity. Such patents allegedly diminish the incentives for innovation due to increased licensing and litigation costs. However, these debates often occur without well-defined measurements of patent scope. This paper explores two very simple metrics for measuring patent scope based on claim language: independent claim length and independent claim count. We validate these measures by showing that they have explanatory power for several correlates of patent scope used in the literature: patent maintenance payments, forward citations, the breadth of patent classes, and novelty. Using these data, we provide the first large-scale analysis of patent scope changes during the examination process. Our results show that narrower claims at publication are associated with a higher probability of grant and a shorter examination process than broader claims. Further, we find that the examination process tends to narrow the scope of patent claims in terms of both claim length and claim count, and that the changes are more significant when the duration of examination is longer.

Congestion Pricing for Patent Applications

In recent years a great deal of attention has been paid to patent reform. This debate is exemplified by recent popular publications (Jaffe and Lerner, 2004; Bessen and Meurer, 2008), as well as publicized patent litigation such as the NTP v. Research-in-Motion patent litigation (the Blackberry patents). At the same time, scholars point to the over-burdened patent offices, the growth in patent applications, and the proliferation of low-quality or overlapping patents. In this paper, we take a novel approach to dealing with the flood of applications at the patenting authorities in the US and Europe and the resulting delay and issuance of low quality patents. We explore the magnitude of the congestion externality and seek to determine the optimal balance of the direct costs of applying for a patent with the indirect cost caused by regulatory delay. Our proposed theoretical and empirical framework enable explicit measurement of the cost of delay and the implications of changing patent application fees. The results have implications for a variety of policy questions involving optimal fees, patent quality, and competition policy. We include in this submission a basic theoretical model that can be extended to examine a number of policy implications, including the relationship between examination time and patent quality. We also describe an empirical approach that enables quantification of the cost of delay. Both the model and the empirical work enable us to discuss additional policy questions such as the importance of application versus renewal fees, the consequence of the self-funding constraint on patent offices, and the impact of higher quality patents on rent-seeking activities. Preliminary results show that the patent office revenue maximizing fee exceeds the optimal fee for patent holders, but that the optimal fee for patent holders is positive.This research benefited from a Tilburg Law and Economics Center (TILEC) IIPC grant.

Monetizing Marks: Insights from the USPTO Trademark Assignment Dataset

Attention to the asset value of intellectual property (IP) has traditionally concentrated on high‐value patent sales and licenses. This narrow focus neglects nonpatent assets held by a broader set of economic agents, such as trademarks, and overlooks the evolving ways owners are employing and monetizing their intangible assets. To help remedy this deficiency, the Office of Chief Economist of the United States Patent and Trademark Office (USPTO) is releasing a series of datasets in formats convenient for researchers. This article describes the USPTO Trademark Assignment Dataset, a database of over 785,000 transactions recorded during 1952–2013 affecting almost 4.2 million trademark registrations and applications. We provide a comprehensive description and present key trends, showing that among registrations issued during 1978–2013, more than 31% were affected by some transaction during their lives, 21% were transferred to different parties, and 12% were involved in at least one security interest agreement. Examining transaction rates by registration cohort, we find evidence that registered U.S. trademarks may be more likely to be traded than are U.S. patents. Other trends and findings are discussed. Despite limitations, these data open new avenues for research, particularly with respect to trademark collateralization and the market for brands.

Patent Transactions in the Marketplace: Lessons from the USPTO Patent Assignment Dataset

Transaction records involving U.S. patent documents have been maintained by the United States Patent and Trademark Office (USPTO) for over 40 years, but have not been extensively used by scholars. One explanation is that these data have not been in a form amenable for research. To help remedy this deficiency and to foster scholarship, the USPTO Office of Chief Economist is curating internal agency records to release a series of datasets in research‐ready formats. This article describes the USPTO Patent Assignment Dataset (UPAD), a relational database of roughly 6 million assignments, licenses, securitizations, and other conveyances involving about 10 million U.S. patents and patent applications, recorded 1970–2014. To promote research uses, this article provides a comprehensive data description and presents stylized facts derived from the records. Although this article discusses several limitations inherent in using these data, the release of the UPAD creates opportunities to conduct original research, particularly relating to intellectual property collateralization and the markets for technology and innovation.