Injunctions, Firm Value, and Technology Commercialization

Abstract

Routinely granted injunctions during patent lawsuits have been regarded as a significant obstacle to firm innovation. We use the 2006 Supreme Court ruling in eBay v. MercExchange that reduced injunction likelihood in cases related to information and communications technology (ICT) patents to examine the effects of injunction likelihood on firms’ stock prices, operating performance, and technology commercialization. We find that affected firms’ stock prices react more favorably to patent litigation following the eBay ruling. Relatedly, we find that firms that are subject to reduced injunction likelihood experience better profitability and faster technology commercialization.

Keywords: technology commercialization; patent litigation; injunction; stock value

JEL Classification: G12, G14, O34