Spillover Effects of Patent Litigation Initiated by Non-Practicing Entities: Evidence from the Capital Market
61 Pages Posted: 12 Dec 2019
Date Written: November 14, 2019
We analyze the potential spillover effects from patent-infringement litigation initiated by non-practicing entities (NPEs). When a firm is sued by NPEs, its at-risk technology peers also experience significant market value losses around the litigation filing date, losses that are much greater than those around patent litigations initiated by practicing entities. We also show that state anti-troll laws mitigate the spillover effects. Technology peers that are not subsequently sued by NPEs experience negative operational impacts, including a decline in R&D innovation efficiency following NPE litigations. Overall, our evidence suggests that there are more big losers from NPE litigation than what has been identified in the existing NPE litigation literature.
Keywords: Spillover Effects; Patent-Infringement Litigation; Non-Practicing Entities; Technology Peers
JEL Classification: G14; O34; O32; M41; K11
Suggested Citation: Suggested Citation