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Sterzi, V., Maronero C., Orsatti G., & Vezzulli A. (2021). Non-Practicing Entities in Europe: an Empirical Analysis of Patent Acquisitions at the European Patent Office

The proliferation of non-practicing entities (NPEs) has become a topic of intense academic debate and an important public policy issue especially in the U.S., where academic researchers have focused most of their attention. On the contrary, conventional wisdom holds that the presence of NPEs in Europe is only marginal, due to some combination of higher cost of enforcement and smaller damages awards. In our study, we criticize this view.
We use a brand-new database of NPE patent applications at the EPO to assess the presence of NPEs in Europe, by reconstructing their patent portfolios and investigating their main patent acquisition sources, together with the industries they operate in. We find that NPEs own almost 20 thousand patent applications filed at the European Patent Office (EPO), mainly in the Electrical Engineering field where they acquire about 9% of all transacted patents in the last decade.
One of our key contributions is to bring data to a heretofore largely theoretical debate about the role of NPEs in the market for technology. We find that, in some respects, NPEs differ significantly from product companies with regard to the characteristics of the patents they acquire, but also that NPEs are very heterogeneous as we find that NPEs’ business models significantly influence the choice of the patents acquired and the use of the patents acquired.

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Ascione, G. S., Ciucci, L., Detotto, C., & Sterzi, V. (2021). Do universities look like patent trolls? An Empirical Study of University Patent Infringement Litigation in the United States (No. 202105). Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

In an attempt to increase revenues from patenting and licensing activities, some universities have started in recent years to pursue “overzealous” strategies to protect their existing patents, by enforcing them in court and selling them to the highest bidder. In our paper, we provide the first comprehensive evidence on the characteristics of universities’ litigation strategies, by comparing patents litigated by
universities to those litigated by patent trolls and other entities. In doing so, we collect data on patent infringement lawsuits in the United States in the years 2003-2016 and we analyze three dimensions that have been identified in the literature as characteristics of patent trolls’ behavior: (i) the intensity with which a patent is litigated, (ii) the choice to file a patent lawsuit in the Federal District Court of Texas Eastern, and (iii) the quality of the asserted patents. We find that while overall universities’ litigation strategies seem to differ from those of patent trolls, this is not the case in the ICT field, the most targeted by trolls, where universities frequently litigate their patents in the Eastern District of Texas and that are of lower quality compared to patents litigated by other entities.

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→ Sterzi, V.(2021). Patent Assertion Entities and Patent Ownership Transparency: Strategic Recording of Patent Transactions at the Uspto. Journal of Competition Law and Economics (forthcoming)

Many patent assertion entities (PAEs) hide behind multiple 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 study to which extent PAEs delay the recording of the U.S. patent reassignments of patents that they will subsequently use in infringement patent lawsuits. On average, PAEs notify the change of ownership more quickly than producing firms, but this is not the case for the patents that they will litigate relatively far in time. In particular, the correlation between the recording lag of the patent transaction and the litigation spell is higher when the patent acquirer is a PAE (than when it is a producing firm) or when the acquirer will litigate the patent in the Eastern District of Texas, famously home to opportunistic litigations. Finally, we find that transactions involving unknown subsidiaries of PAEs are recorded at the USPTO significantly later than those involving PAE parent companies or their known subsidiaries.

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→  Sterzi, V., Rameshkoumar, J. P., & Van Der Pol, J. (2021). Non-practicing entities and transparency of patent ownership in Europe: the case of UK dormant companies. Technological Forecasting and Social Change, 172, 121069.

While various studies in the fields of law and economics have analysed the business models of patent aggregators and large non-practicing entities (NPEs) in the US, small NPEs operating in Europe typically escape academic and media attention. Here, to address this imbalance, we specifically identify and characterize the patent portfolios of NPEs registered as dormant companies in the UK and investigate whether they are created for the purpose of acquiring valuable IP assets or launching litigation campaigns. Our econometric analysis – based on more than two hundred NPEs registered as dormant companies in 2019 – supports the second hypothesis. Finally, as an illustrative example of how small NPEs use UK dormant companies to acquire and litigate patents in Europe, we describe the business model of Dragon Green Development Balboa SA, an entity incorporated in the Republic of Panama that controls thirteen UK dormant companies and which is involved in fourteen patent litigation cases in Germany.

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→  Carayol, N., & Sterzi, V. (2021). The transfer and value of academic inventions when the TTO is one option. Journal of Economics & Management Strategy, 30(2), 338-367.

Although the transfer of professors’ inventions is typically performed by an intermediary set up by the university (the technology transfer office), other forms of transfer do coexist in reality. To clarify this situation and its consequences, we develop a model that endogenizes a professor’s decision regarding the form of transfer for her invention in which intermediation by the transfer office is only one of two options, the other one being a transfer carried out by the professor herself. The intermediary can reach more potential licensees of the invention, whereas the professor is usually better at mitigating information asymmetry through signaling. In the semiseparating equilibrium of the game, promising technologies are likely to be cherry‐picked and transferred by the professor. This prediction that the transfer mode is influenced by invention quality is tested and confirmed, as are several other predictions, on our sample of 446 UK academic inventors. Specific care is taken to control for other mechanisms of IP assignment, such as those derived from consulting and sponsored research. Insights in terms of policy are drawn from this new perspective focusing on alternative transfer channels, match quality, and information asymmetry rather than on moral hazard.

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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