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Impact of patent infringement damages on firms' innovation performance: the moderating effects of patent-intensive industries

Yuting Deng (School of Intellectual Property, Nanjing University of Science and Technology, Nanjing, China)
Yong Qi (School of Intellectual Property, Nanjing University of Science and Technology, Nanjing, China) (School of Economics and Management, Nanjing University of Science and Technology, Nanjing, China)
Qing Guo (School of Intellectual Property, Nanjing University of Science and Technology, Nanjing, China)

Business Process Management Journal

ISSN: 1463-7154

Article publication date: 2 October 2024

59

Abstract

Purpose

The patent thickets exacerbate patent infringement, especially in patent-intensive industries. Damages are a crucial remedy for patent infringement, upholding innovation incentives in the patent system. This paper aims to examine the impact of damages on the subsequent innovation performance of plaintiff and defendant firms and the moderating role of patent-intensive industries in these effects.

Design/methodology/approach

Based on data from 1,062 Chinese firms involved in patent infringement litigation, this paper uses Poisson panel regression models to examine the dynamic impact of damages on incremental and breakthrough innovation performance for plaintiff and defendant firms and further validates the moderating role of patent-intensive industries on the impacts. Additionally, this paper conducts heterogeneity analysis by categorizing the sample into micro and small enterprises (MSEs) and medium and large enterprises (MLEs).

Findings

This paper shows that MLE plaintiffs skew toward incremental rather than breakthrough innovations after awarding damages, whereas MSEs transiently engage in high-level innovation activities. (2) Plaintiffs with higher payout ratios are more inclined toward undertaking breakthrough innovations. (3) Awarded damages significantly inhibit the innovative output of defendants at varying levels of innovation. (4) Plaintiff firms in patent-intensive industries show more innovation after awarding damages than those in other sectors, but damages do not effectively encourage MSEs to innovate. Defendants in patent-intensive industries are also more reluctant to innovate after damages.

Originality/value

This paper empirically investigates the relationship between patent damages and firms' subsequent innovation performance in terms of litigation status, organizational scale and level of technological innovation. Besides, this paper reveals the differences in the impact of patent protection on firms' innovation in patent-intensive industries versus other industries.

Keywords

Acknowledgements

Funding: This paper was supported by the National Social Science Fund of China (Grant number: 22VRC064; 23AZD038) and the National Natural Science Foundation of China (NSFC) (Grant number: 71974096).

Citation

Deng, Y., Qi, Y. and Guo, Q. (2024), "Impact of patent infringement damages on firms' innovation performance: the moderating effects of patent-intensive industries", Business Process Management Journal, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/BPMJ-05-2024-0335

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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