Patent Purchases and Litigation Outcomes

We test empirically whether purchased patents that are litigated fare better or worse than litigated patents that aren’t purchased. We identified every case filed in 2009 and 2010 that had a definitive winner and had information on the presence or absence of an assignment or other transfer. That left us with 516 decisions. Of those 516 decisions, the patentee won 125, or 24.2%. Of the patents, 280, or just over half, had been transferred before the litigation began.We find that overall, patentees won 21% of the time with patents that had been sold before litigation began, and 28% of the time with patents they developed in-house. But combining all patent cases may obscure important differences between plaintiffs who buy patents and those who don’t. Dividing our study into entity types produces a surprising result. Operating companies fare better when they assert patents they developed in house. They won 33% of the time when asserting their own patents, but only 23% of the time when asserting purchased patents. By contrast, inventor-owned NPEs -- but not patent assertion entities -- do better with purchased patents. The results also differ by area of technologyOur results have implications for the design of patent markets and for the efficiency of patent licensing transactions.