Fred Bereskin, Po-Hsuan Hsu, and Huijun Wang have posted a paper on ssrn titled Injunction Likelihood, Exploration in Branding and Innovation, and Market Value. Here is a link to the paper, and here is the abstract:
Routinely granted injunctions during patent lawsuits have been regarded as a significant obstacle to economic growth and corporate competition. 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 effect of the reduced injunction likelihood on firms’ market values. We find that affected firms’ stock prices react favorably to this reduced injunction likelihood. Firms with reduced injunction likelihood become more profitable and explore more in branding and patenting activities. These effects concentrate in firms with lower cash holdings and greater financial constraints.
The authors’ findings are consistent with, and complementary to, those previously reported by Filippo Mezzanotti & Timothy Simcoe, Patent Policy and American Innovation After eBay: An Empirical Examination, 48 Rsch. Pol’y 1271 (2019) (finding no evidence that eBay has hindered innovation), and Filippo Mezzanotti, Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D, 67 Mgmt. Sci. 7362 (2021) (finding that eBay had a positive impact on R&D spending by established firms). The current paper is different, however, in “focusing on the role of defendants in patent infringement lawsuits” (p.4), though perhaps one could argue that that focus does not exclude the possibility that eBay has advanced these firms’ ability to innovate while possibly reducing the incentives of potential plaintiffs. On the other hand, the analysis focuses exclusively on practicing entities, not NPEs (p.9), and perhaps practicing entities on average are equally likely to be infringement plaintiffs or defendants.