Valuing Patents on Market Reaction to Patent Infringement Litigations
Innovation is more important in any companies.
However, it is not easy to measure the innovation performance
correctly. Patent is one of measuring index nowadays. This paper
wants to purpose an approach for valuing patents based on market
reaction to patent infringement litigations. The interesting
phenomenon is found from collection of patent infringement litigation
events. That is if any patent litigation event occurs the stock value will
follow changing. The plaintiffs- stock value raises some percentage.
According to this interesting phenomenon, the relationship between
patent litigation and stock value is tested and verified. And then, the
stock value variation is used to deduce the infringed patents- value.
The purpose of this study is providing another concept model to
evaluate the infringed patents. This study can provide a decision assist
system to help drafting patent litigation strategy and determine the
technology value
[1] Arthur Anderson & Co., The Valuation of Intangible AssetsÔÇöSpecial
Report No. P254, The Economist Intelligence Unit, London, 1992.
[2] P. Thomas, "A relationship between technology indicators and stock
market performance," Scientometrics, vol. 51, no. 1, pp. 319-333, 2001.
[3] D. Somaya, "Strategic determinants of decisions not to settle patent
litigation," Strategic Management Journal, vol. 24, pp. 17-38, 2003.
[4] E. Andrews, "Texas instrument loses in Japanese ruling," New York
Times, September 1, 1994.
[5] E.F Sherry and D.J. Teece, "Royalties, evolving patent rights, and the
value of innovation," Research Policy, vol. 33, pp. 179-191, 2004.
[6] M. Kanellos, "Rambus shares plunge on talk of trial ruling, " CNET
News, March 15, 2001;
http://news.cnet.com/news/0-1003-200-5148431.html (30% 1-day fall).
[7] S. Van Triest and W. Vis, "Valuing patents on cost-reducing technology:
A case study", International Journal of Production Economics, vol. 105,
pp. 282-292, 2007.
[8] N. Rutter, "The great patent plague," Forbes, pp. 58-66, Mar. 29, 1993.
[9] S. Bhagat, J. A. Brickley and J. L. Coles: "The Wealth Effects of Interfirm
Lawsuits," Journal of Financial economic, vol. 35, pp.221-247, 1994.
[10] P.S. Koku, A.A. Qureshi and A. Akhigbe, "The effects of news on initial
corporate lawsuits," Journal of Business Research, vol. 53, pp. 49-55,
2001.
[11] J. R. Allison, M. A. Lemley, K. A. Moore and R. D. Trunkey, "Valuable
patents," Georgetown Law Journal , vol. 92, pp. 435-479, 2004.
[12] Lai, Yi-Hsuan, Che, Hui-Chung and Wang, Szu-Yi, Managing Patent
Legal Value via Fuzzy Neural Network incorporated with Factor
Analysis, In: Proceedings of WiCOM 2008: Engineering, Services and
Knowledge Management Track (EMS 2008), Dalian, China, 15-17 Oct.
2008.
[13] P. Hanel, "Intellectual property rights business management practices: A
survey of the literature," Technovation, vol. 26, pp. 895-931, 2006.
[14] I. Cockburn and Z. Griliches, "Industry effects and appropriability
measures in the stock market-s valuation of R&D and patents," American
Economic Review, vol. 78, no. 2, pp. 419-423, 1988.
[15] J. O. Lanjouw and M. Schankerman, "Stylized Facts of Patent Litigation:
Value, Scope and Ownership," NBER Working Paper, no. 6297, 1997.
[16] J. O. Lanjouw, A. Pakes and J. Putnam, "How to Count Patents and Value
Intellectual Property: The Uses of Patent Renewal and Application Data,"
Journal of Industrial Economics, vol. 46, no. 4, pp. 405-433, 1998.
[17] J. O. Lanjouw, "Patent Protection in the Shadow of Infringement:
Simulation Estimations of Patent Value," The Review of Economic
Studies, vol. 65, pp. 671-710, 1998.
[18] J. O. Lanjouw and M. Schankerman, "Characteristics of Patent
Litigation: A Window on Competition," The Rand Journal of Economics,
vol. 32, no. 1, pp. 129-151, 2001.
[19] S. Bhagat, and R. Romano: "Events Studies and the Law: Part I :
Technique and Corporate Litigation," American Law and Economic
Review, vol. 4, pp. 141-168, 2002.
[20] M. Hirschey and V. J. Richardson, "Are scientific indicators of patent
quality useful to investors," Journal of Empirical Finance, vol.11, no. 1,
91-107, 2004.
[21] M. Reitzig, "Improving patent valuations for management purposes -
validating new indicators by analyzing application rationales," Research
Policy, vol. 33, no. 6-7, pp. 938-957, 2004.
[22] M. Reitzig, J. Henkel, and C. Heath, "On sharks, trolls, and their patent
prey - unrealistic damage awards and firms' strategies of being infringed,"
Research Policy, vol. 36, no. 1, pp. 134-154, 2007.
[23] T. S. Raghu, W. Woo, S. B. Mohan and H. R. Rao, "Market reaction to
patent infringment litigations in the information technology industry,"
Inf Sys Front, Vol. 10, pp. 61-75, 2008.
[24] Y. J. Chiu and Y. W. Chen, "Using AHP in patent valuation",
Mathematical and Computer Modeling, vol. 46, no. 7-8, pp. 1054-1062,
2007.
[25] E. Masson and Y. J. Wang, "Introduction to computation and learning in
artificial neural networks," European Journal of Operational Research,
vol. 47, pp. 1-28, 1990.
[26] D.E. Rumelhart, G.E. Hinton and R.J. Williams, "Learning internal
representations by error propagation," in: D.E. Rumelhart and J.L.
McClelland (Eds.), Parallel Distributed Processing, Explorations into the
Microstructure of Cognition, Vol. 1, pp. 318-362. Cambridge, MA: MIT
Press, 1986.
[27] Y. Chauvin, and D. E. Rumelhart (Eds.), "Backpropagation: theory,
architectures and applications," Hillsdale, NJ: Erlbaum, 1995.
[28] P.D. Wasserman, "Neural computing: theory and practice," New York:
Van Nostrand Reinhold, 1989.
[29] J.-S. R. Jang, C.-T. Sun and E. Mizutani, Neuro-fuzzy and soft
computing, Prentice-Hall International, Inc, 1997.
[30] K. Hornik, M. Stinchcombe and H. White "Multilayer feedforward
networks are universal approximators," Neural Networks, vol. 2, pp.
359-366, 1989.
[31] K. A. Krycha and U. Wagner, "Applications of artificial neural networks
in management science: a survey," Journal of Retailing and Consumer
Services, vol. 6, pp. 185-203, 1999.
[1] Arthur Anderson & Co., The Valuation of Intangible AssetsÔÇöSpecial
Report No. P254, The Economist Intelligence Unit, London, 1992.
[2] P. Thomas, "A relationship between technology indicators and stock
market performance," Scientometrics, vol. 51, no. 1, pp. 319-333, 2001.
[3] D. Somaya, "Strategic determinants of decisions not to settle patent
litigation," Strategic Management Journal, vol. 24, pp. 17-38, 2003.
[4] E. Andrews, "Texas instrument loses in Japanese ruling," New York
Times, September 1, 1994.
[5] E.F Sherry and D.J. Teece, "Royalties, evolving patent rights, and the
value of innovation," Research Policy, vol. 33, pp. 179-191, 2004.
[6] M. Kanellos, "Rambus shares plunge on talk of trial ruling, " CNET
News, March 15, 2001;
http://news.cnet.com/news/0-1003-200-5148431.html (30% 1-day fall).
[7] S. Van Triest and W. Vis, "Valuing patents on cost-reducing technology:
A case study", International Journal of Production Economics, vol. 105,
pp. 282-292, 2007.
[8] N. Rutter, "The great patent plague," Forbes, pp. 58-66, Mar. 29, 1993.
[9] S. Bhagat, J. A. Brickley and J. L. Coles: "The Wealth Effects of Interfirm
Lawsuits," Journal of Financial economic, vol. 35, pp.221-247, 1994.
[10] P.S. Koku, A.A. Qureshi and A. Akhigbe, "The effects of news on initial
corporate lawsuits," Journal of Business Research, vol. 53, pp. 49-55,
2001.
[11] J. R. Allison, M. A. Lemley, K. A. Moore and R. D. Trunkey, "Valuable
patents," Georgetown Law Journal , vol. 92, pp. 435-479, 2004.
[12] Lai, Yi-Hsuan, Che, Hui-Chung and Wang, Szu-Yi, Managing Patent
Legal Value via Fuzzy Neural Network incorporated with Factor
Analysis, In: Proceedings of WiCOM 2008: Engineering, Services and
Knowledge Management Track (EMS 2008), Dalian, China, 15-17 Oct.
2008.
[13] P. Hanel, "Intellectual property rights business management practices: A
survey of the literature," Technovation, vol. 26, pp. 895-931, 2006.
[14] I. Cockburn and Z. Griliches, "Industry effects and appropriability
measures in the stock market-s valuation of R&D and patents," American
Economic Review, vol. 78, no. 2, pp. 419-423, 1988.
[15] J. O. Lanjouw and M. Schankerman, "Stylized Facts of Patent Litigation:
Value, Scope and Ownership," NBER Working Paper, no. 6297, 1997.
[16] J. O. Lanjouw, A. Pakes and J. Putnam, "How to Count Patents and Value
Intellectual Property: The Uses of Patent Renewal and Application Data,"
Journal of Industrial Economics, vol. 46, no. 4, pp. 405-433, 1998.
[17] J. O. Lanjouw, "Patent Protection in the Shadow of Infringement:
Simulation Estimations of Patent Value," The Review of Economic
Studies, vol. 65, pp. 671-710, 1998.
[18] J. O. Lanjouw and M. Schankerman, "Characteristics of Patent
Litigation: A Window on Competition," The Rand Journal of Economics,
vol. 32, no. 1, pp. 129-151, 2001.
[19] S. Bhagat, and R. Romano: "Events Studies and the Law: Part I :
Technique and Corporate Litigation," American Law and Economic
Review, vol. 4, pp. 141-168, 2002.
[20] M. Hirschey and V. J. Richardson, "Are scientific indicators of patent
quality useful to investors," Journal of Empirical Finance, vol.11, no. 1,
91-107, 2004.
[21] M. Reitzig, "Improving patent valuations for management purposes -
validating new indicators by analyzing application rationales," Research
Policy, vol. 33, no. 6-7, pp. 938-957, 2004.
[22] M. Reitzig, J. Henkel, and C. Heath, "On sharks, trolls, and their patent
prey - unrealistic damage awards and firms' strategies of being infringed,"
Research Policy, vol. 36, no. 1, pp. 134-154, 2007.
[23] T. S. Raghu, W. Woo, S. B. Mohan and H. R. Rao, "Market reaction to
patent infringment litigations in the information technology industry,"
Inf Sys Front, Vol. 10, pp. 61-75, 2008.
[24] Y. J. Chiu and Y. W. Chen, "Using AHP in patent valuation",
Mathematical and Computer Modeling, vol. 46, no. 7-8, pp. 1054-1062,
2007.
[25] E. Masson and Y. J. Wang, "Introduction to computation and learning in
artificial neural networks," European Journal of Operational Research,
vol. 47, pp. 1-28, 1990.
[26] D.E. Rumelhart, G.E. Hinton and R.J. Williams, "Learning internal
representations by error propagation," in: D.E. Rumelhart and J.L.
McClelland (Eds.), Parallel Distributed Processing, Explorations into the
Microstructure of Cognition, Vol. 1, pp. 318-362. Cambridge, MA: MIT
Press, 1986.
[27] Y. Chauvin, and D. E. Rumelhart (Eds.), "Backpropagation: theory,
architectures and applications," Hillsdale, NJ: Erlbaum, 1995.
[28] P.D. Wasserman, "Neural computing: theory and practice," New York:
Van Nostrand Reinhold, 1989.
[29] J.-S. R. Jang, C.-T. Sun and E. Mizutani, Neuro-fuzzy and soft
computing, Prentice-Hall International, Inc, 1997.
[30] K. Hornik, M. Stinchcombe and H. White "Multilayer feedforward
networks are universal approximators," Neural Networks, vol. 2, pp.
359-366, 1989.
[31] K. A. Krycha and U. Wagner, "Applications of artificial neural networks
in management science: a survey," Journal of Retailing and Consumer
Services, vol. 6, pp. 185-203, 1999.
@article{"International Journal of Business, Human and Social Sciences:59503", author = "Yu J. Chiu and Chia H. Yeh", title = "Valuing Patents on Market Reaction to Patent Infringement Litigations", abstract = "Innovation is more important in any companies.
However, it is not easy to measure the innovation performance
correctly. Patent is one of measuring index nowadays. This paper
wants to purpose an approach for valuing patents based on market
reaction to patent infringement litigations. The interesting
phenomenon is found from collection of patent infringement litigation
events. That is if any patent litigation event occurs the stock value will
follow changing. The plaintiffs- stock value raises some percentage.
According to this interesting phenomenon, the relationship between
patent litigation and stock value is tested and verified. And then, the
stock value variation is used to deduce the infringed patents- value.
The purpose of this study is providing another concept model to
evaluate the infringed patents. This study can provide a decision assist
system to help drafting patent litigation strategy and determine the
technology value", keywords = "Patent valuation, infringement litigations, stock value,artificial neural networks.", volume = "3", number = "6", pages = "1008-7", }
