Christian Helmers and Brian Love have posted a paper on ssrn titled Injunctions and Venture Capital: An Empirical Look at eBay's Effect on Startups, 16 NYU J. Intell. Prop. & Enter. L. __ (forthcoming 2027). Here is a link to the paper, and here is the abstract:
In the two decades that have passed since the Supreme Court raised the bar for awarding injunctive relief in eBay v. MercExchange, numerous descriptive studies have documented a corresponding reduction in the frequency with which patent enforcers obtain injunctions against ongoing infringement. However, surprisingly few attempts have been made to assess whether eBay had a broader effect on incentives to innovate. As a result, it remains controversial whether eBay advances patent law's fundamental goal of spurring invention--and thus should be preserved--or instead stands in the way of progress--and thus should be reversed or legislatively abrogated. We inform this active policy debate by presenting the results of an empirical analysis of eBay's effect on venture-backed startups, a segment of the innovation economy that is generally regarded as both disproportionately affected by patent protection at the margin and disproportionately responsible for economic growth and job creation. Our results suggest that eBay had a modest and mixed effect on startup performance, not the broadly negative effect predicted by critics of the decision. This is true even among medical technology startups, a group that theory predicts is especially susceptible to eBay's hypothesized harms.
This is an important paper that deserves attention from policymakers. It adds to the empirical literature evaluating the effect of eBay (in particular, papers by Mezzanotti & Simcoe, Mezzanotti, and Bereskin, Hsu & Wang, previously cited on this blog here) by focusing specifically on venture-backed startups founded between 2002 and 2005, information on which the authors obtained from PitchBook (see pp. 21-22). Helmers and Love summarize their findings as follows:
. . . our analysis indicates that the eBay decision had, at most, a modest, mixed effect on startups. What our results primarily suggest is that medtech and IT startups performed no differently than startups in all other areas. We find no evidence that the eBay decision was associated with an increase in shutdowns or down rounds, a reduction in firms’ likelihood of raising an additional round of VC funding, or changes in the quarterly frequency of VC investments. In addition, when we focus on the set of startups that was likely most impacted by eBay—those that filed patent applications prior to the decision—we likewise find no evidence that startups in either set of impacted industries were relatively less likely to progress to late-stage VC funding, more likely to resort to unpriced fundraising deals, or slower to close funding rounds; nor do we find that they grew at relatively slower rates as measured by headcount or the size of the VC deals they completed.
Moreover, when our specifications do produce statistically significant results, those results are mixed. In the medtech industry, our results suggest that startups grew relatively rapidly in the years following eBay as measured by the size of the deals they closed (in the overall sample) and the valuations reflected in those deals (in the overall and patenting samples) and, in addition, were generally more likely than startups in control industries to progress to a Series C funding round. At the same time, our results also suggest that patenting medtech startups were relatively less likely to obtain an initial round of VC funding post-eBay. Similarly, in the software and IT industries, our results indicate that startups grew relatively rapidly in terms of deal size and valuation overall, yet were also less likely to obtain an initial VC investment following eBay in both the overall and patenting samples (p.39).
One possible conclusion to draw, among others, is that "the association between patenting and startup performance may not be driven by the potential enforceability of . . . patents, but rather . . . their value as signals" (p.41).
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