Abstract

Alberto Galasso, Mark Schankerman and Carlos J. Serrano, (2013). Trading and Enforcing Patent Rights. RAND Journal of Economics.

We study how the market for innovation affects enforcement of patent rights. We show that patent transactions arising from comparative advantages in commercialization increase litigation, but trades driven by advantages in patent enforcement reduce it. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates across states as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that trade reduces litigation on average, but the impact is heterogeneous. Patents with larger potential gains from trade are more likely to change ownership, and the impact depends critically on transaction characteristics.

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Carlos J. Serrano is an Assistant Professor of Economics and Business at Universitat Pompeu Fabra, where he teaches business economics, business strategy, and economic institutions and markets. He received his doctorate degree from the University of Minnesota in 2006. Professor Serrano’s research has been in the Economics of Innovation and Technological Change, and Entrepreneurship.
Carlos Serrano teaches Competitive Starategy and Technology Markets at the Barcelona School of Management-UPF.

Authors

Carlos J. Serrano

Department of Economics and Business
Universitat Pompeu Fabra and Barcelona School of Management

Alberto Galasso

University of Toronto Mississauga

Mark Schankerman

London School of Economics