To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules

Josh   Lerner; Anne  Layne-Farrar

Article | International Journal of Industrial Organization | March 2011

To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules

by Josh Lerner and Anne Layne-Farrar

Abstract

In recognition that participation in modern patent pools is voluntary, we present empirical evidence on participation rates and the factors that drive the decision to join a pool, including the profit sharing rules adopted by the pool's founders. In most participation contexts, the at-risk group is extremely difficult, if not impossible, to identify. For pools centered on technologies that result from a standard-setting process, in contrast, we are able to identify a relatively unambiguous population of patents eligible for inclusion but that have not been included in the pool. We find that vertically integrated firms, with patents and downstream operations, are more likely to join a patent pool and among those firms that do join, those with relatively symmetric patent contributions (in terms of value) to a standard appear more likely to accept numeric patent share rules for dividing royalty earnings.

Keywords: Patents; Alliances; Vertical Integration; Standards;

Format: Print

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Citation:

Lerner, Josh, and Anne Layne-Farrar. "To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules." International Journal of Industrial Organization 29, no. 2 (March 2011): 294–303.

Article | Journal of Financial Economics | May 2020

The Creation and Evolution of Entrepreneurial Public Markets

Shai Bernstein, Abhishek Dev and Josh Lerner

This paper explores the creation and evolution of new stock exchanges around the world geared towards entrepreneurial companies, known as second-tier exchanges. Using hand-collected novel data, we document the proliferation of these new stock exchanges that were created in a large number of countries, attracted a significant volume of global IPOs, were introduced fairly cyclically, and had lower listing requirements when compared to first-tier stock exchanges. We find that increases in demand for entrepreneurial capital—as proxied for by patenting, IPOs, and stock market valuations—led to a higher likelihood of the introduction of second-tier exchanges. We find no evidence that new second-tier exchanges diverted the existing flow of IPOs from established stock exchanges. Shareholder protection strongly predicted exchange success, even in countries with high levels of venture capital activity, patenting, and financial market development. Second-tier exchanges in countries with better shareholder protection allowed younger, less profitable, but faster-growing companies to raise more capital. These results highlight the importance of institutions in enabling the provision of entrepreneurial capital to young companies.

Keywords: entrepreneurial finance; stock exchanges; Entrepreneurship; Finance; Initial Public Offering; Capital;

Citation:

Bernstein, Shai, Abhishek Dev, and Josh Lerner. "The Creation and Evolution of Entrepreneurial Public Markets." Journal of Financial Economics 136, no. 2 (May 2020): 307–329. View Details

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In the fall of 2018, Hiro Mizuno, the Chief Investment Officer (CIO) of GPIF, the Japanese Government Pension Fund, was reflecting on his efforts to integrate Environmental, Social and Governance (ESG) issues into every aspect of GPIF’s portfolio. His efforts ranged from constructing new stock market indices based on ESG data, changing the compensation and incentives of active investment managers and passive funds, pushing for more corporate sustainability reporting and integrated reporting, and establishing collaborations with other asset owners to drive systems level change. He was convinced that the only way to meet his responsibilities to his beneficiaries was to improve the performance of the entire economy through a focus on improving corporate governance, increasing inclusion in the workplace and gender diversity and reducing environmental damage and progress towards tackling climate change. The early results from his efforts were promising, but was there more he could do?

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To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules

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