Sued and Doomed? Patent Litigation and Startup VC Financing

时间：2022年10月14日10:30-12:00

地点：承泽园402教室

Abstract: Studies in strategy and entrepreneurship have examined how patents function as startups’ quality signals to attract external financing. However, few have investigated adversaries in which the startup’s value is at risk; one such is litigations. Meanwhile, litigation studies primarily examine their disruption on firm performance through innovation, not external financing. This paper fills the gap in the literature by studying how being sued for patent infringement affects startups’ venture capital (VC) financing. Using a matched sample and exploiting variations in practices among courts, we find that litigations reduce startups’ probability of receiving VC investment and the amount of investment. Besides, we find that the negative impact is less prominent when the startup has more quality signals and when the litigation is less harmful.

Short Bio:Mingtao Xu (xumt@sem.tsinghua.edu.cn) is an assistant professor at the School of Economics and Management of Tsinghua University. He received his PhD in Strategic Management from Purdue University. His research has appeared in the Academy of Management Review and Organization Science. His interests include technological innovation, property rights, and AI and strategy.