The assignment of intellectual property rights and innovation

Armstrong, Christopher, Glaeser, Stephen, Park, Stella and Timmermans, Oscar ORCID: 0000-0003-2220-0057 (2025) The assignment of intellectual property rights and innovation. Journal of Accounting Research. ISSN 0021-8456 (In Press)

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Abstract

We study how the assignment of intellectual property rights between inventors and their employers affects innovation. Incomplete contracting theories predict that stronger employer property rights reduce the threat that employee inventors hold up their employers, thereby affecting inventor and invention outcomes. We test these predictions using a U.S. appellate court ruling that shifted the assignment of property rights from inventors to their employers. Within-employer-year analyses demonstrate that affected inventors are less likely to retain patent rights, assign patents to new employers, or leave their current employer, all consistent with reduced inventor ability to hold up their employers. Due to the reduced possibility of hold-up, affected inventors’ innovations are revealed more promptly when disclosed, draw from a broader set of prior patents, and spread more to subsequent patents. If affected inventors do leave their employer, they are more likely to relocate to unaffected states. Furthermore, employers affected by the ruling are more likely to locate their inventors in agglomeration economies and alter their innovation strategy by reallocating activity across states and expanding their innovation portfolios. Our collective evidence suggests that shifting intellectual property rights to employers affects inventor and invention outcomes by reducing the threat of employee hold-up from the employer’s perspective.

Item Type:	Article
Divisions:	Accounting
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HB Economic Theory K Law
JEL classification:	J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General
Date Deposited:	16 Dec 2025 09:36
Last Modified:	19 Dec 2025 10:27
URI:	http://eprints.lse.ac.uk/id/eprint/130648

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