Patent Trolls and Startup Employment

68 Pages Posted: 19 Dec 2016 Last revised: 5 Aug 2018

Ian Appel

Boston College - Carroll School of Management

Joan Farre-Mensa

Northeastern University, D'Amore-McKim School of Business

Elena Simintzi

University of North Carolina at Chapel Hill

Date Written: July 22, 2018

Abstract

We analyze how frivolous patent-infringement claims made by non-practicing entities (NPEs, or "patent trolls") affect startups' ability to grow and create jobs, innovate, and raise capital. Our identification strategy exploits the staggered adoption of anti-troll laws in 32 U.S. states. The laws lead to a 4.4% increase in employment at high-tech startups—an increase driven by IT firms, a frequent target of NPEs. Increased access to financing, both venture capital and patent-backed lending, is a key channel driving our findings. Measures aimed at curbing the threat posed by NPEs can thus help reduce the real and financing frictions faced by startups.

Keywords: employment, startups, patent trolls, NPEs, venture capital

Suggested Citation

Appel, Ian and Farre-Mensa, Joan and Simintzi, Elena, Patent Trolls and Startup Employment (July 22, 2018). Available at SSRN: https://ssrn.com/abstract=2887104 or http://dx.doi.org/10.2139/ssrn.2887104

Ian Appel (Contact Author)

Boston College - Carroll School of Management ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

Joan Farre-Mensa

Northeastern University, D'Amore-McKim School of Business ( email )

Boston, MA 02115
United States

Elena Simintzi

University of North Carolina at Chapel Hill ( email )

McColl Building, Room 4200B
300 Kenan Center Drive
Chapel Hill, NC 27599-3490
United States

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