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Earnings Targets, Strategic Patent Sales, and Patent Trolls

Author

Listed:
  • Kim, Jinhwan

    (Stanford U)

  • Valentine, Kristen

    (U of Georgia)

Abstract
Innovative public firms sell 9.6% (615) more patents in the last month, relative to the first half of the fiscal year. Consistent with reporting incentives driving these sales, they are more pronounced among firms with strong incentives to meet earnings expectations. Patents sold in the last month are litigated more frequently because they are disproportionately sold to “patent trolls†, who opportunistically acquire patents to engage in litigation. We find anti-troll laws reduce opportunistic acquisition among trolls. We highlight a novel consequence of corporate reporting incentives: its contribution to strategic patent sales, which in turn impact the market for innovation.

Suggested Citation

  • Kim, Jinhwan & Valentine, Kristen, 2024. "Earnings Targets, Strategic Patent Sales, and Patent Trolls," Research Papers 4162, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:4162
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    File URL: https://www.gsb.stanford.edu/faculty-research/working-papers/earnings-targets-strategic-patent-sales-patent-trolls
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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