| Popis: |
Patent Assertion Entities (PAEs) play an increasingly important role in business strategy, innovation, and litigation. Their strategic advantage in litigation comes from the ability to fend off counter-suits. We develop a model of R&D competition, bargaining and litigation to study the channels through which ‘patent privateering’ (whereby a PAE asserts patents bought from a producing firm) affect the incentives of operating companies to invest in R&D and enforce intellectual property. We find that PAEs increase the offensive value of patents, thus enhancing firms’ incentives to invest in R&D. On the other hand, they lower these incentives by reducing the defensive value of patents, and also by decreasing total industry profits. We show that the welfare effect of PAEs on firms and consumers may be positive, even when they increase litigation threats, lower industry profits, and acquire patents only for monetization reasons. |
