Shielded Innovation

39 Pages Posted: 7 Apr 2016

See all articles by Lauren Cohen

Lauren Cohen

Harvard Business School; National Bureau of Economic Research (NBER)

Umit G. Gurun

University of Texas at Dallas

Scott Duke Kominers

Harvard University

Date Written: April 4, 2016

Abstract

We show that increased litigation risk has driven innovators to shield themselves by shifting innovation out of industry and into universities. We show both theoretically and empirically that litigation by non-practicing entities (NPEs) pushes innovation to spaces with reduced litigation threat. Innovation has shifted into universities (and away from public and private firms) in exactly those industries with the most aggressive NPE litigation, precisely following extensive NPE litigation. The extent of innovation shielding is large and significant. An increase of 100 NPE lawsuits in an industry shifts up the university share of innovation by roughly 70% in subsequent years (t=5.34).

Keywords: Patent Trolls, NPEs, PAEs, Innovation, Patents

JEL Classification: D20, K10, O31

Suggested Citation

Cohen, Lauren and Gurun, Umit G. and Kominers, Scott Duke, Shielded Innovation (April 4, 2016). Available at SSRN: https://ssrn.com/abstract=2758841 or http://dx.doi.org/10.2139/ssrn.2758841

Lauren Cohen (Contact Author)

Harvard Business School ( email )

Rock Center 321
Soldiers Field
Boston, MA 02163
United States

HOME PAGE: http://www.people.hbs.edu/lcohen

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Umit G. Gurun

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Scott Duke Kominers

Harvard University ( email )

Rock Center
Harvard Business School
Boston, MA 02163
United States

HOME PAGE: http://www.scottkom.com/

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