Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 7, 2023 erstellt
Description:
We investigate whether and how firms strategically launch patent lawsuits against competitors to facilitate future acquisitions of the same firm, a practice we define as sue-and-acquire. We find a heightened likelihood of mergers and acquisitions after the filing of a patent lawsuit. Notably, the sue-and-acquire practices are particularly pronounced when the initial patent lawsuit is likely to be strategically motivated, namely, (i) when the plaintiff and defendant firms more directly compete in a product market, (ii) when the lawsuit is filed in the Eastern District of Texas, a venue characterized by a high concentration of strategic patent lawsuits, and (iii) in IT and patent thicket industries, where strategic patent lawsuits are more common. Additional analyses of market responses to the acquisition announcements reveal that suing-and-acquiring firms benefit from the practice, and part of the benefit stems from reduced product competition. Lastly, we find some evidence that sue-and-acquire plaintiffs are less likely to prevail in courts, further confirming that sue-and-acquire lawsuits are less driven by the merits of the patent disputes and more likely to be strategically motivated. Overall our findings suggest that firms exploit the patent legal system to eliminate competition, a practice that should be of interest to patent and anti-trust regulators