The American Inventors Protection Act and the staggered market reaction to patent grants

Starting in December 2000, the American Inventors Protection Act requires patent applications to be announced 18 months after filing rather than when the patent is granted. We document that while the application and the patent grant announcements are associated with positive abnormal returns, this staggered information flow reduces the reaction to patent grants post-2001. Furthermore, more innovative patents obtain larger abnormal returns around both the patent grant and the application announcement. Returns to less innovative patents, however, concentrate on the grant date, consistent with the market perceiving the applications as less likely to be approved.