Research / BFI Working PaperMar 25, 2019

The Patent Troll: Benign Middleman or Stick-Up Artist?

David S. Abrams, Ufuk Akcigit, Gokhan Oz, Jeremy Pearce

How do non-practicing entities (“Patent Trolls”) impact innovation and technological progress? We employ unprecedented access to NPE-derived patent and financial data and a novel model to answer this question. We find that NPEs tend to acquire litigation-prone patents from small firms and acquire patents less core to the seller’s business. When NPEs license patents, those that generate higher fees are closer to the licensee’s business and more litigation-prone. More- over, downstream innovation drops when patents are acquired by NPEs. Quantitatively, the overall impact of NPEs depends on the share of infringements that come from non-innovating producers.

More Research From These Scholars

BFI Working Paper Feb 20, 2023

Parental Education and Invention: The Finnish Enigma

Philippe Aghion, Ufuk Akcigit, Ari Hyytinen, Otto Toivanen
Topics:  Economic Mobility & Poverty
BFI Working Paper Apr 15, 2019

Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory

Ufuk Akcigit, Sina T. Ates
Topics:  Technology & Innovation
BFI Working Paper Apr 3, 2023

Where Have All the “Creative Talents” Gone? Employment Dynamics of US Inventors

Ufuk Akcigit, Nathan Goldschlag
Topics:  Financial Markets, Employment & Wages