Trends in private patent costs and rents for publicly-traded United States firms

We use detailed data to estimate the private costs and private rents of United States patents for publicly-traded firms. To estimate these costs, we combine lawsuit data from Derwent Litalert with non-practicing entity (NPE) lawsuits collected by Patent Freedom, and use an event-study approach to estimate losses suffered by alleged infringers during 1984-2009. To estimate these rents, we combine patent data from the USPTO and EPO with financial data from CRSP and COMPUSTAT, and use market-value regressions to estimate the value of patent rents for publicly-traded US firms during 1979-2002. We find that private costs exceed private rents during 1999-2000 and the trend in costs is sharply higher. Costs also exceed forecasts of rents for 2005-09. Surges in the number of NPE lawsuits contribute to the increase in the gap.