We examine the impact of lost intellectual property protection on innovation, competition, mergers and acquisitions and employment agreements. We consider firms whose ability to protect intellectual property (IP) using patents is potentially invalidated following the Alice Corp. vs. CLS Bank International Supreme Court decision. This decision has impacted patents in multiple areas including business methods, software, and bioinformatics. We use state-of-the-art machine learning techniques to identify firms’ existing patent portfolios' potential exposure to the Alice decision. While all affected firms decrease patenting post-Alice, we find an unequal impact of decreased patent protection. Large affected firms benefit as their sales and market valuations increase, and their exposure to lawsuits through patent trolls decrease. They also acquire fewer firms post-Alice. Small affected firms lose as they face increased competition, product market encroachment, and lower profits and valuations. They increase R&D and have their employees sign more nondisclosure and noncompete agreements.
