Wednesday, September 13, 2017 | 12:00pm-1:00pm | Room 763, HSBC Business School Building

Abstract

Using novel hand-collected patent litigation data from 2000-2006, we show that patent litigation has important financial and real impacts on firms. We find that patent litigation reduces financial flexibility and weakens product market performance. We also find that defendant firms experience decline in innovation performance and shift in innovation strategy to safer projects. We sharpen our results by instrumenting the probability of being sued and the timing of patent litigation using China’s participation in TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement in 2001. In addition, we find negative effects of patent litigation on industry-wide innovation outcomes, which suggest that patent litigation has spillover effects on other non-litigated firms in the industry.