Revisiting the consequences of loans secured by patents on technological firms' intellectual property and innovation strategies

Cécile Ayerbe, Jamal Azzam, Selma Boussetta and Julien Pénin

Research Policy, 2023, vol. 52, issue 8

Abstract: This article analyzes the impact of loans secured by patents (LSPs) on the intellectual property and innovation strategy of technological firms that benefit from them. The literature mostly emphasizes that LSPs, by reducing the risk taken by lenders in case of borrowers' default, facilitate the financing of technological firms. However, it remains silent on the impact of LSPs on the behavior and strategy of borrowers. With regard to this second point, our research suggests that LSPs are not neutral. In particular, we provide evidence that LSPs might induce technological firms to deviate from innovative activities toward more short-term strategies based on the monetization and litigation of their patents. We also show that financing groups might attempt to encourage this strategic change. Our research is based, first, on empirical insights provided by a qualitative analysis of publicly known LSPs offered by an international investment group and their consequences for four borrowers. Second, we propose a theoretical model that formally explores how LSPs might impact borrowers' strategies. Even though the welfare implications of these findings are difficult to evaluate, this research has likely important economic and managerial implications with regard to intellectual property management, the financing of innovation and the organization of the innovation process.

Keywords: Loans secured by patents; Patent collateral; Non-practicing-entities; Licensing; Patent monetization (search for similar items in EconPapers)
JEL-codes: O3 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0048733323001087
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:52:y:2023:i:8:s0048733323001087

DOI: 10.1016/j.respol.2023.104824

Access Statistics for this article

Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray

More articles in Research Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().