Litigation#257tier 2live in productionNew

`patent npe attack short`

cadence: Dailydata: lowshort only

2019

Bessen, J., Meurer, M. J. (2008). "Of patents and property." *Journal of Economic Perspectives*. Cohen, L., Gurun, U. G., Kominers, S. D. (2019). "Patent trolls." *Review of Financial Studies* (working paper). Tucker, C. (2014). "Patent trolls and technology diffusion." *Management Science*.

Citation only — paper link pending.

What it checks

Patent trolls — shell companies that own patents but don't make anything — sue tech firms to extract settlements. We short the defendant when one of these suits drops because the legal overhang typically depresses the stock for a few months.

Mechanism

Non-practicing-entity (NPE / "patent troll") suits drain real cash from operating defendants via settlement and legal fees plus a behavioural injunction overhang. Cohen-Gurun-Kominers 2019 documents significant 3-12mo abnormal under-performance among NPE-campaign defendants. Tech firms are targeted disproportionately.

No production champion data for this family yet. Stats appear once the discovery pipeline promotes at least one strategy with this family tag, or once a multi-family blend that includes it earns a champion slot.

Signal rule

Per defendant ticker, treat each patent_litigation filing as a candidate NPE attack (or filter by plaintiff name pattern LLC/IP/LICENSING/HOLDINGS/PROPERTIES if the column lands). Fire SHORT on filing date (T+1); hold 20/40 trading days.

Data dependencies

daily_prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
patent_litigation
Worker data table — see services/worker schema.

Expected edge

Paper alpha: -2% to -5% over 6-12mo
Paper window: T+0 to T+40d

Cohen-Gurun-Kominers 2019: 2-5% abnormal underperformance over 6-12mo on NPE-campaign defendants.

Example tickers where this is likely to fire

AAPL MSFT GOOGL META AMZN QCOM INTC AMD ORCL

Illustrative only — the signal fires based on the live data, not a fixed list.

Related families

patent litigation loss driftEvent

Defendant-win → bullish drift (overhang lifts); plaintiff-win → bearish drift for defendant.

patent innovation premiumNetwork-Effects

Patent values inferred from 3-day stock reaction to USPTO grant. Firms with high value of recently granted patents (relative to market cap) outperform by ~3-5%/yr — real options on growth the market under-prices until citations validate.

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patent npe attack short