Wednesday, November 22, 2023

Helmers and Love: Empirical Assessment of eBay, PTAB, and Alice

Christian Helmers and Brian J. Love have posted a paper on ssrn titled Patent Law Reform and Innovation:  An Empirical Assessment of the last 20 Years.  Here’s a link, and here is the abstract:

We ask whether the most important U.S. patent system reforms of the last 20 years—elimination of presumptive injunctive relief for victorious patent enforcers in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), creation of the Patent Trial and Appeal Board (PTAB) in the America Invents Act, and restriction of software’s eligibility for patent protection in Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014)—had a measurable impact on innovation in the U.S. Specifically, we construct firm-level measures of innovation and of exposure to each reform and adopt a variety of dif-in-dif approaches that assesses how innovation-related activities changed post-reform at relatively exposed versus relatively unexposed firms. We find: a positive association between eBay and R&D spending by firms that were relatively more exposed to patent litigation prior to the Court’s decision; a positive association between the introduction of PTAB proceedings and both R&D expenditures and patent filings by firms that innovate in tech classes where PTAB has been most active; and a positive association between Alice and both R&D spending by software firms and patenting by firms that held relatively more software patents prior to the Court’s opinion.

With regard to eBay, the authors’ reported findings are consistent with results reported by Filippo Mezzanotti & Timothy Simcoe, Patent Policy and American Innovation After eBay: An Empirical Examination, 48 Rsch. Pol’y 1271 (2019) (finding no evidence that eBay has hindered innovation), and Filippo Mezzanotti, Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D, 67 Mgmt. Sci. 7362 (2021) (finding that eBay had a positive impact on R&D spending by established firms) (previously noted here, along with another paper reporting similar findings by Bersekin, Hsu & Wang).  At the end of the paper, however, the authors note some possible limitations, stating “we caution that the nature of our analysis requires that we source data from publicly traded firms and our results should be considered with that limitation in mind. While it is reassuring that patenting and R&D spending trends among our panel of firms closely mirror those seen in aggregate statistics, the reactions of publicly traded firms may not be representative of the reactions of privately held firms, which may tend to be relatively smaller and newer on average.”

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