Social Value of Patents: Evidence from the U.S. Court of Appeals for the Federal Circuit

When stronger patent law reduces patenting: Empirical evidence

“…We use the CAFC index constructed in Hou et al (2022) to measure the geographical variation in the legal protection of patents across different circuits before and after CAFC. Hou et al (2022) constructed an index to represent how the CAFC changed the interpretation of patent law, using the equation below: The outcome variable, Z pct , takes the values of 0, 1, and 2 increasing in the order of patent litigation outcomes of invalid, valid but not infringed, and valid and infringed.…”

“…Next, Hou et al (2022) controlled for patent characteristics, including the number of patent claims, whether the patent was assigned to a business entity, and the technological class of the patent, as well as litigation characteristics including whether the patent owner was a defendant or not, whether the case was tried in the home circuit of the patentee, and whether the case was an appealed case.…”

“…This article uses the following datasets, which are available as explained: 1. CAFC: Hou et al (2022), Table 1; 2. Patents: (a) Patent applications: NBER Patent Database ORCID Yun Hou https://orcid.org/0000-0001-5874-1600 I.P.L.…”

“…To represent geographical variation in the changes due to the CAFC, Hou et al (2022) constructed an index from a regression of court rulings in patent cases on circuit fixed effects before and after the CAFC, and showed that the CAFC increased the rate of appeals, and the stock market value of patents. These results support the inference that the timing and direction of the CAFC rulings were not anticipated.…”

“…Importantly, the shift in favor of patent owners varied geographically by judicial circuit (Atkinson, Marco, & Turner, 2009; Henry & Turner, 2006; Henry & Turner, 2016). We adapt the Hou, Png, and Xiong (2022) CAFC index and investigate how the variations in the pro‐patentee shift across circuits affected strategic patenting and entry in manufacturing industries. We stipulate strategic patent applications as being those related to continuing applications as these delay patent issuance and are more likely to lead to litigation (Abrams et al, 2019; Hegde, Mowery, & Graham, 2009; Lemley & Moore, 2004; Veihl, 2022).…”