Addendum to Attack of the Shorting Bass: Does the Inter Partes Review Process Enable Petitioners to Earn Abnormal Returns?
This addendum supplements a more in-depth analysis originally published in the UCLA Law Review Discourse in October 2015, available at
In this addendum, we update the empirical findings reported in the published article to reflect new information. We will continue to update the results from the event study in this addendum as Kyle Bass files more petitions for inter partes review and the PTAB issues decisions on those petitions.
The new data presented in this addendum corroborate our initial conclusions. For convenience, we reprint the published abstract here.
The Patent Trial and Appeal Board launched a patent review process called inter partes review that provides for a faster review of patent validity than previous methods. The inter partes review also has less restrictive rules about which entities can file a petition challenging a patent. Investment firms have taken advantage of these changes. We test whether the patent challenges made by one investment manager, Kyle Bass, the head of Hayman Capital Management LP, negatively affected the stock prices of the challenged companies. Through an event study, we show that the initial challenges created significant negative abnormal returns. Since then, market reactions have become muted and no longer consistently produce returns that are either negative or statistically significant.