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Orsatti Gianluca and Sterzi Valerio – NPEs, the Market for Patents and Follow-on Innovation. Evidence from Patent Transfers at the USPTO  

We provide original evidence on the role of Non-Practicing Entities (NPEs) for follow-on innovation by looking at the transfers of USPTO patents involving these entities over the period 1990-2016. Our evidence is threefold. First, NPEs build selected patent portfolios and contribute relevantly and increasingly to patent transfers in the United States. Second, their impact on follow-on innovation around the acquired assets is, on average, negative. We estimate a post-transfer reduction in forward citations received by patents transferred to NPEs of ~3%. Third, heterogeneous NPE business models co-exist, with different implications for innovation. NPEs that build valuable patent portfolios do not harm (or are even beneficial to) follow-on innovation around the acquired patents. Similar evidence applies to NPEs that sell large portions of their patent portfolios to producing companies. By contrast, the negative effect is driven by specific NPEs, i.e. those that operate opportunistically and build weak patent portfolios. Lastly, we contribute the debate on the functioning of the market for technology. On average, transfers between producing companies are associated with an increased use of the patent. However, this is not the case in high-tech domains. This suggests that the transfer of high-tech patents is largely motivated by strategic reasons.

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Sterzi Valerio, Rameshkkoumar Jean-Paul, and Van Der Pol Johannes – Non-practicing entities and transparency in patent ownership in Europe, Bordeaux Economics Working Paper 2020-10

Non-practicing entities (NPEs) file or buy patents from a variety of sources and employ them primarily to obtain license fees by asserting them against accused infringers, without any intention of using the invention they protect. This report gives unique insight into how NPEs game Europe’s patent system for profit. The report also provides further evidence that the problem of NPEs is migrating to Europe from the US, and it proposes policy responses to increase patent ownership transparency. The report is largely based on forensic original research into two cases. These cases point to a serious lack of transparency in patent and corporate ownership. They demonstrate how shell or dormant companies, often of unknown ownership and commonly established in the UK, are used to acquire European patents, and how these companies exploit those patents in courts in the European Union – especially Germany. The report also shows that due to the lack of transparency of patent ownership, the problem of NPEs gaming the system is almost certainly far worse than the report states.

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Sterzi Valerio – Patent assertion entities and patent ownership transparency: strategic recording of patent transactions at the USPTO, Bordeaux Economics Working Paper 2020-19

Many PAEs hide behind dozens of unknown subsidiaries or shell companies with obscure ownership. Meanwhile, the United States Patent and Trademark Office (USPTO), like many other patent offices, does not impose a strict time period for recording the change of ownership of a patent, allowing the holder to gain an advantage by controlling the timing of its ownership disclosure. In this paper we analyze recording lags in patent transactions (defined as the time lag from the execution of the patent assignment to USPTO recording) and show that PAEs strategically notify the patent office of the transaction as a function of their litigation strategies. In particular, OLS estimates suggest that for every ten days that separate the date of the start of the litigation from the execution of the patent transaction, PAEs delay the recordation of the transaction by almost four days (while the lag is about two days when the assignee is a product company). Longer recording lags are especially associated with transactions related to patents transferred to PAEs in the ICT sector, that are litigated in the District Court in the Eastern District of Texas and that are acquired by PAEs through unknown subsidiaries.

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→ Martínez, C. and V. Sterzi, published online first 9 January 2020 – The impact of the abolishment of the professor’s privilege on European university-owned patents, Industry and Innovation

Intellectual property regimes governing university inventions were quite diverse in Europe at the end of the 1990s. Several European countries maintained the so-called professor’s privilege, an exception to employment law whereby university researchers were allowed to retain the ownership of academic inventions. The 2000s were characterised by convergence towards a more homogeneous system, in which university administrations took control of IP management. We investigate the impact of the reform and we observe a decline in the technological importance and the value of the patents owned and managed by universities in the countries abolishing the professor’s privilege. On the contrary, by differentiating the academic patents by type of ownership, we find that the technological importance of academic patents owned by companies has instead increased. Our study produces some new results that may alert policymakers to the possible unintended consequences of the university ownership model.

>>> Link to the paper

→  C. Martínez and V. Sterzi – University patenting and the quest for technology transfer policy models in Europe, chapter in Varga A. and Erdos K. (Eds.), Handbook of Universities and Regional Development, Edward Elgar (2019)

→ V. Sterzi, F.Lissoni, M.Pezzoni – Patent management by universities: evidence from Italian academic inventions – Industrial and Corporate Change (2019)

Over the past 20 years, European universities have increased their propensity to retain title of their faculty’s inventions, but evidence on the value of such patents is at best mixed. Based on a longitudinal sample of Italian academic patents (patents over faculty’s inventions), assigned either to universities or firms, we find that the lower value of university-owned patents, versus firm-owned ones, is owing to lower Technological Importance of the inventions and less effective Exploitation of the related patents. Lack of experience in managing patented inventions explains our results for Technological Importance, but not for Exploitation. Both are unrelated to the presence of a technology transfer office. Our study suggests caution in pushing universities to expand their patent portfolios and in using university-owned patents as indicators of technology-transfer activities.

>>> Link to the paper

→ S. Fusco, F. Lissoni, C. Martinez, V. Sterzi – Monetization Strategies of University Patents through PAEs: an Analysis of US Patent Transfers  – ISSI (the International Society for Informetrics and Scientometrics) Proceedings (2019)

The pressure to extract rents from academic research results has led many universities to file more patents and to rely on a growing range of monetization strategies including selling patents to Patent Assertion Entities (PAEs).
We build a database of university patents granted by the USPTO and, for each of them, we collect information about the change of ownership. A first analysis of these data shows that about 12% of university patents have been transferred at least once (including reassignments to universities, hospitals, public research centres and governmental institutions) and only a minor part has been acquired by PAEs (the 0.3% of university patents). However, we also find that most transfers of university patents to PAEs occurred in the last ten years (3.4% of transfers). These acquisitions are largely concentrated in two large PAEs that acquired about 80% of all PAEs-acquired university patents: Intellectual Ventures and Intellectual Discovery.
An econometric analysis on the characteristics of university patents transferred to PAEs shows that patents transferred to PAEs are of high quality, suggesting that PAEs cherry pick good patents for monetization purposes. PAEs acquire also older university patents than those transferred to producing companies. This fact suggests that these transfers are not linked to technology transfer.

>>> Link to the paper


→ Martínez, C. and V. Sterzi, published online first 19 March 2020 – Patently misguidedResearch Europe