Do Startup Patent Acquisitions Affect Inventor Productivity?

Abstract

We show that the acquisition of a startup inventor’s first patent has a negative effect on the subsequent productivity of the patent’s inventor, leading to 6.7 fewer patents being granted to the inventor over the following five years. This effect is not due to the inventors of acquired patents being able to focus on high-quality patents—in fact, the opposite appears to be the case. Our novel identification strategy is motivated by two new findings: Incumbent firms are more likely to acquire the patents of startups that patent examiners ask them to cite, and examiners are more likely to cite patents that they have reviewed in the past. When combined with the quasi-random assignment of patent applications to examiners, these two findings give rise to quasi-random linkages between startups and potential acquirers that help identify the causal effect of patent acquisitions on inventor productivity.

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