Technology and Investment

Volume 4, Issue 1 (February 2013)

ISSN Print: 2150-4059   ISSN Online: 2150-4067

Google-based Impact Factor: 0.47  Citations  

The Market Effects of Patent Litigation

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DOI: 10.4236/ti.2013.41007    6,697 Downloads   9,964 Views  Citations
Author(s)

ABSTRACT

This study measures the value of patents to firms and identifies factors that contribute to that value by observing the abnormal change in firms stock market values following court decisions. Firms lose 0.85% (about $19 million) of their value following a decision that one of their patents is “Invalid”, but only gain about 0.7% following a Valid & Infringed decision. The factors that that affect the expectations of investors as to the enforceability of patent rights are at least as important in determining the contribution of the patent to the firms market value as are characteristics of the patent. Most prominently, this confirms the substantial impact that the creation of the Court of Appeals for the Federal Circuit (CAFC) had on the value of patents. After the creation of the CAFC, “Invalid” decisions resulted in a 0.7% (about $15.5 million) greater loss of firm value. Clearly, patents are more valuable because of this change in the legal landscape.

Share and Cite:

M. Henry, "The Market Effects of Patent Litigation," Technology and Investment, Vol. 4 No. 1, 2013, pp. 57-68. doi: 10.4236/ti.2013.41007.

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