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Market reaction to patent infringement litigations in the information technology industry

Title
Market reaction to patent infringement litigations in the information technology industry
Authors
Raghu T.S.Woo W.Mohan S.B.Rao H.R.
Ewha Authors
우원석
SCOPUS Author ID
우원석scopus
Issue Date
2008
Journal Title
Information Systems Frontiers
ISSN
1387-3326JCR Link
Citation
vol. 10, no. 1, pp. 61 - 75
Indexed
SCIE; SCOPUS WOS scopus
Abstract
Intellectual property portfolios that include unique inventions and discoveries are potentially inimitable resources that provide strategic leverage to Information Technology (IT) firms. The increasing patent related litigations in the IT industry, and the high costs associated with litigations make this an economically significant activity. Taking a market oriented view to this issue we investigate the economic impact of patent infringement litigation on both the plaintiff and the defendant firms in IT industry. Event study methodology is used to assess the effect of the litigation on the stock market returns around the date of litigation announcement as well as the date of settlement/ termination. Our results suggest that the news of patent infringement litigation was unfavorably accepted in the stock market for the defendants. On the other hand, abnormal returns for plaintiff firms around litigation announcement date as well as settlement/termination date were significantly positive. We find evidence to the effect that patent litigations are not zero-sum games since combined abnormal returns for the plaintiff and defendant firms are negative. Patents belonging to the electronic and electric categories are more likely to influence market returns, whereas computer and communications patent categories are less likely to do so. Patent importance (as measured by patent citations) is found to be an important contributor to market's evaluation of a patent litigation's impact. © 2007 Springer Science+Business Media, LLC.
DOI
10.1007/s10796-007-9036-5
Appears in Collections:
스크랜튼대학 > 국제학부 > Journal papers
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