2006), “The Private Value of Software Patents

We investigate the value creation or destruction associated with the introduction of software patents in the United States in two ways. The first looks at the cumulative abnormal returns to Information and Communication Technology (ICT) firms around the time of important court decisions that impacted software patents, and the second analyzes the relationship between firms ’ stock market value, the sector in which they operate, and their holdings of software patents. We find that the extension of patentability to software was initially negative for software firms, especially for those producing application software or services. However, we also find that the ownership of software patents is positively and significantly associated with Tobin’s Q, and that the market’s valuation of software patents increased following changes in the USPTO’s treatment of software patents in 1995