An Empirical Examination of Patent Hold-Up
A large literature asserts that standard essential patents (SEPs) allow their owners to “hold up” innovation by charging fees that exceed their incremental contribution to a final product. We evaluate two central, interrelated predictions of this SEP hold-up hypothesis: (1) SEP-reliant industries should experience more stagnant quality-adjusted prices than similar non-SEP-reliant industries; and (2) court decisions that reduce the excessive power of SEP holders should accelerate innovation in SEP-reliant industries. We find no empirical support for either prediction. Indeed, SEP-reliant industries have the fastest quality-adjusted price declines in the U.S. economy.
COMPLETE PAPER: An Empirical Examination of Patent Hold-Up
ABSTRACT: An Empirical Examination of Patent Hold-Up
Why Do Inventors Sell to Patent Trolls? Experimental Evidence for the Asymmetry Hypothesis
by Stephen H. Haber and Seth H. Werfel
January 23, 2015
Why do individual patent holders assign their patents to “trolls” rather than license their technologies directly to manufacturers or assert them through litigation? We explore the hypothesis that an asymmetry in financial resources between individual patent holders and manufacturers prevents individuals from making a credible threat to litigate against infringement. First, individuals may not be able to cover the upfront costs associated with litigation. Second, unsuccessful litigation can result in legal fees so large as to bankrupt the individual. Therefore, a primary reason why individual patent holders sell to PAEs is that they offer insurance and liquidity. We test this hypothesis by experimentally manipulating these financial constraints on a representative sample of inventors and entrepreneurs affiliated with Stanford University and UC Berkeley. We find that in the absence of these constraints, subjects were significantly less likely to sell their patent to a PAE in a hypothetical scenario. Furthermore, treatment effects were significant only for subjects who were hypothesized to be most sensitive to these constraints.
COMPLETE PAPER: Why Do Inventors Sell to Patent Trolls? Experimental Evidence for the Asymmetry Hypothesis
ABSTRACT: Why Do Inventors Sell to Patent Trolls? Experimental Evidence for the Asymmetry Hypothesis
Patent Holdup: Do Patent Holders Holdup Innovation?
by Alexander Galetovic, Stephen Haber, and Ross Levine
May 7, 2014
President Obama and Congress have recommended major patent reforms based on the belief that the patent system allows patent holders to holdup the commercialization of complex technologies. Although reform proponents point to the rise in patent cases and the increased role of “trolls” in those cases, there is no evidence these developments have hurt what actually matters: the products that we buy and the prices that we pay.
In this paper, we find that the rate of innovation—as reflected in prices—has rarely, if ever, been faster than it is in exactly those industries that reform advocates point to as embodying the patent holdup problem. If patent holdup is slowing innovation, it is slowing it down to perhaps the fastest rate in human history. Our analyses also shed a skeptical light on the direction of major reform proposals that envisage a greater role for regulatory-type bodies and a commensurately smaller role for the courts. A considerable body of research suggests the prevalence of regulatory capture, which could undermine the good intentions of such proposals.
COMPLETE PAPER: Patent Holdup
ABSTRACT: Patent Holdup
Where Does Democracy Thrive: Climate, Technology, and the Evolution of Economic and Political Institutions
Stanford University and NBER
August 24, 2012
Why are some societies characterized by enduring democracy, while other societies are either persistently autocratic or experiment with democracy but then quickly fall back into autocracy? I find that there is a systematic, non-linear relationship between rainfall levels and regime types such that such that stable democracies overwhelmingly cluster in a band of moderate rainfall (540 to 1200 mm of precipitation per year), while the world’s most
persistent autocracies cluster in arid environments and rain-forests. This relationship is robust to controls for the resource curse, as well as to controls for ethno-linguistic fractionalization, the percent of the population that is Muslim, disease environment, and colonial heritage. I advance a theory to explain this relationship, focusing on differences in the biological and technological characteristics of the crops that can be grown in different precipitation environments. Variance in the biological and technological characteristics of crops generated variance in producers’ strategies to solve problems of scarcity, giving rise to variance in the distribution of human capital and institutions associated with the protection of property rights. Democracy was more likely to thrive in environments in with a high level and broad distribution of human capital, and with institutions that protected property rights. I test the theory against a unique cross-country dataset, a comparison of democracies and autocracies in antiquity, and a series of natural experiments.
Where Does Democracy Thrive