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Creditor Rights and Innovation: Evidence from Patent Collateral

65 Pages Posted: 29 Apr 2014 Last revised: 26 Sep 2017

William Mann

University of California, Los Angeles (UCLA) - Anderson School of Management

Date Written: September 26, 2017

Abstract

I show that patents are pledged as collateral to raise significant debt financing, and that the pledgeability of patents contributes to the financing of innovation. In 2013, 38% of US patenting firms had pledged their patents as collateral at some point, and these firms performed 20% of R&D and patenting in Compustat. Employing court decisions as a source of exogenous variation in creditor rights, I show that patenting companies raised more debt, and spent more on R&D, when creditor rights to patents strengthened. Subsequently, these companies exhibited a gradual increase in patenting output and the use of patents as collateral.

Suggested Citation

Mann, William, Creditor Rights and Innovation: Evidence from Patent Collateral (September 26, 2017). Available at SSRN: https://ssrn.com/abstract=2356015 or http://dx.doi.org/10.2139/ssrn.2356015

William Mann (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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