Changes In Tests Of Patentability And The Effects On Return To Patenting Of Business Method Patents

Abstract

In the past decade there has been a surge of business method patents granted, due in large part to court cases that have redefined the tests for determining patentability of these inventions. This is of interest for several reasons such as the legality of these patents and their role in promoting innovation. Rather than promoting innovation as desired, they may be used to block rival firms from competing or used as bargaining chips in negotiations. This research focuses on the relationship between firm value and the importance of a firm's patent portfolio. To measure the strength of a patent portfolio it can be found how many patent citations the portfolio has and firms that are cited more often would be deemed more important. This research finds a weak relationship between patent citations and increased firm value possibly since business method patents themselves may be less valuable than pharmaceutical or chemical patents for instance. It's also observed that the return to a citation is negative after critical court rulings, contrary to economic intuition. Possible reasons for these mixed results are discussed.