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AIEA Seminar Series

Escaping the Patent Trolls: The Impact of Non-Practicing Entity Litigation on Firm Innovation Strategies
  • Kenneth Huang (National U. of Singapore)
  • Oct. 16th 9AM Taipei/Beijing/HK/Singapore & Oct. 15th, 9PM EST
  • Mei-Xuan Li (National Taiwan U.), Carl Hsin-han Shen (Macquarie U.), Yanzhi Wang (National Taiwan U.)
  • Umit Gurun (U. of Texas at Dallas)
  • https://zoom.us/meeting/register/tJwod-6vrj8tHt3IF7-zo3R9s0dbXBCK8jYs
ABSTRACT Non-practicing entities (NPEs) are firms that amass patents to assert their intellectual property rights but have little or no intention of further developing these patents (a practice known as patent trolling). NPEs tend to initiate lawsuits not for actual patent infringements but for the potential profits derived from out-of-court settlements. In this study, we examine how firms shift their innovation strategies in response to heightened NPE litigation risks. We theorize that firms targeted by NPEs who become defendants in NPE-initiated litigation (i.e., target firms) will subsequently draw more upon their in-house technologies to reduce the potential legal ground for such lawsuits. We further hypothesize that the non-target firms in related technology areas will shift the locus of their innovation activities away from those of the target firms to avoid the areas with high NPE litigation risks. These effects are more pronounced when research and development (R&D) expenses for the patented technologies are higher and when the product markets are more competitive. Results from our difference-in-differences estimates and instrumental variable regression analyses provide support for these hypotheses. Overall, our results suggest that firms facing NPE litigation risks would shift their follow-on innovation trajectories and distance themselves from the existing network of innovation activities in an attempt to escape patent trolling. Our study yields important managerial and policy implications for firms and policymakers.
Kenneth Huang (National U. of Singapore)

Dr. Kenneth Huang is an Associate Professor (with tenure) at the National University of Singapore (NUS) in the Department of Industrial Systems Engineering and Management (ISEM) and Department of Strategy and Policy, NUS Business School. He is the incoming Academic Director of the Master of Science in Management of Technology Program at NUS. He also serves on the advisory board of the Economist Intelligence Unit (EIU). He is the incoming Senior Editor of Management and Organization Review and is an associate editor of Organization Science (for a special issue) and was a co-editor of Journal of Management Studies (for a special Issue). He also serves on the editorial boards of Academy of Management Journal, Strategic Management Journal and Journal of International Business Studies.

 

His research focuses on innovation and technology management; entrepreneurship; intellectual property management and strategy; global strategy; science and technology policy; open science/ innovation; and institutional change particularly in emerging economies like China and ASEAN. His research is internationally influential and has been published in high-impact peer-reviewed journals such as Science, Academy of Management Journal, Organization Science, Journal of Management, Journal of International Business Studies, Research Policy, Nature Biotechnology, Proceedings of the National Academy of Sciences of the USA (PNAS), Industrial and Corporate Change, Journal of Management Studies, and Academy of Management Best Paper Proceedings.

 

His research has also been recognized by several international research and best paper awards from the Academy of Management (AOM), Strategic Management Society (SMS), DRUID, Academy of International Business (AIB) and INFORMS. His work and commentaries have been featured in Reuters, CNBC, Economist Intelligence Unit, Business Times, MIT Technology Review, Foreign Affairs, China Daily, Asian Scientist, Straits Times, Lianhe Zaobao, ThinkChina and Channel NewsAsia, among other media outlets.

 

 

Umit Gurun (U. of Texas at Dallas)

Umit Gurun is Ashbel Smith chaired professor of finance and accounting at the University of Texas at Dallas. He received his PhD from the Michigan State University. He is a past visiting professor at University of Texas at Austin (2010-2011) and Harvard University (2014). He is an associate editor of Management Science and a research economist at NBER. Professor Gurun’s research focuses on a variety of issues in empirical asset pricing and corporate finance, including the impact of financial media and advertising on asset prices; impact of counterfeit products on brand images and firm valuation, among others. He is particularly interested in the ways that networks affect firm values and investor portfolio allocation. His research has been published in top journals, including Science, American Economic Review: Insights, Journal of Finance, Review of Financial Studies, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Journal of Accounting Research, Management Science, and Harvard Business Review. His recent research relates to the effects of patent litigation on corporate innovation. In this vein, he has been awarded a National Science Foundation grant to investigate the effects of patent litigation policy on innovation outputs. He received distinguished associate editor awards from Management Science six times between 2015 and 2020, and a distinguished referee award from Review of Financial Studies in 2019. Finally, his research has also attracted attention in the popular press, with cites in the Financial Times, Wall Street Journal, Fortune, Institutional Investor, and the Economist.