A Discussion of the Secondary Patent Market: How Bulk Patent Purchases and Sales Affect Stock Prices

Open Access
Author:
Ingber, Jacob Lee
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Chris Muscarella, Thesis Supervisor
  • James Alan Miles, Honors Advisor
Keywords:
  • Patents
  • Event Study
  • Equities
  • Finance
Abstract:
This thesis looks at patents and intellectual property mainly focusing on the secondary patent market. The first section of this paper is an in depth discussion of the patent market. It explores the people and companies involved in buying, selling, and filing for patents, the relatively recent emergence of the non-practicing entity, different valuation techniques of patents, and legal trends with regard to intellectual property. The second section of this paper is a statistical analysis of how stock prices change when companies buy and sell large pools of patents for hundreds of millions of dollars. The analysis finds that companies that buy large amounts of patents see almost no change in stock price while those that sell their patents usually have a positive return. The paper concludes with an interpretation of the analysis and speaks to how the results can influence both managers and investors.