Patent Assertion Entities and Innovation. What do we know from the economic literature?

How do PAEs affect innovation? The introduction of Patent Assertion Entities (PAEs) has stimulated many debates regarding their influence on innovation. PAEs are organizational forms, emerged in the last thirty years, that neither create nor commercialize innovative products, but operate as traders of Intellectual Property (IP) rights between producing firms and original inventors. In the past two decades, the U.S. patent system before and, subsequently, also the European market, have experienced a substantial amount of patent litigations brought by Patent Assertion Entities. For this reason, they have been accused of asserting patents against potential infringers, with the only purpose of collecting money through disproportionate licensing fees. This thesis has collected the recent empirical literature about PAEs, trying to address the issue of defining whether these assertion entities foster or hamper innovative activities since the discussion has been broad and sometimes confusing. Firstly, I will investigate how PAEs influence the Market for Technology by organizing the existing studies on the characteristics of the asserted patents, in particular regarding the quality of these patents, but also on the quality of the litigations initiated by these entities. Secondly, I will review the literature regarding the influence of PAEs on targeted firms, to see what kind of enterprises are the most affected and if they change their R&D decisions, or other investments, as a consequence of the asserted actions. Finally, I will examine if PAEs fulfill their intermediary role by stimulating substantial rewards to individual inventors and by supporting them to further invest in innovation.