Abstract

http://ssrn.com/abstract=2457611
 
 

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The Effect of Patent Litigation and Patent Assertion Entities on Entrepreneurial Activity


Catherine Tucker


Massachusetts Institute of Technology (MIT) - Management Science (MS)

June 22, 2014


Abstract:     
This paper empirically investigates the statistical relation between levels of patent litigation and venture capital ("VC") investment in the U.S. We find that VC investment, a major funding source for entrepreneurial activity, initially increases with the number of litigated patents, but that there is a "tipping point" where further increases in the number of patents litigated are associated with decreased VC investment, which suggests an inverted U-shaped relation between patent litigation and VC investment. This appears strongest for technology patents, and negligible for products such as pharmaceuticals. There is some evidence of a similar inverted U-shaped relation between patent litigation and the creation of new small firms. Strikingly, we find evidence that litigation by frequent patent litigators, a proxy for PAE litigation, is directly associated with decreased VC investment with no positive effects initially.

Number of Pages in PDF File: 42

Keywords: Intellectual Property, Patents, Patent Assertion Entities, Patent Litigation, Patent Trolls, Entrepreneurship, Venture Capital

JEL Classification: K41, M20

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Date posted: June 23, 2014 ; Last revised: June 25, 2014

Suggested Citation

Tucker, Catherine, The Effect of Patent Litigation and Patent Assertion Entities on Entrepreneurial Activity (June 22, 2014). Available at SSRN: http://ssrn.com/abstract=2457611

Contact Information

Catherine Tucker (Contact Author)
Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )
Cambridge, MA 02142
United States
HOME PAGE: http://cetucker.scripts.mit.edu
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