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 Sep 1, 2018

Taxation and Innovation in the 20th Century

Ufuk Akcigit, John Grigsby, Tom Nicholas, Stefanie Stantcheva
Topics:  Fiscal Studies, Economic Mobility & Poverty, Tax & Budget
BFI Working Paper Apr 15, 2019

What Happened to U.S. Business Dynamism?

Ufuk Akcigit, Sina T. Ates
Topics:  Technology & Innovation
BFI Working Paper Aug 2, 2018

Growth through Heterogeneous Innovations

Ufuk Akcigit, William R. Kerr
Topics:  Fiscal Studies, Economic Mobility & Poverty, Energy & Environment