Paper: Geopolitical alignment and patent litigation outcomes: Evidence from China’s AIIB Memberships

Abstract

Over the past decade, geopolitical shifts have been marked by a rise in nationalistic discourse, escalating international tensions, and growing economic competition among states. These evolving dynamics have significantly impacted global business operations, including the legal landscape, which has increasingly exhibited a tendency to prioritize domestic interests. While prior research has extensively examined judicial bias against foreign firms, a crucial aspect remains underexplored: in an increasingly multipolar world, courts may not only disadvantage foreign entities but also extend preferential treatment to firms from geopolitically aligned nations, reinforcing broader strategic alliances. To examine this phenomenon, we investigate how a country's decision to join the Asian Infrastructure Investment Bank (AIIB)—a China-led multilateral development bank that epitomizes Beijing’s efforts to reshape global financial institutions—shapes the legal treatment of its firms in Chinese courts. Specifically, we analyze the effect of AIIB membership on patent litigation outcomes in China, leveraging a rich dataset of patent infringement lawsuits filed by foreign subsidiaries, complemented by firm-level financial data from the Orbis IP database spanning 2010 to 2020. Our findings reveal strong evidence that firms from AIIB member countries experience systematically more favorable rulings in Chinese courts during patent disputes, suggesting that judicial decision-making aligns with China’s broader geopolitical and economic strategies.

Researcher

Raffaele Conti, Professor at ESSEC

Introduction to the paper

2501 - RS with Raffaele Conti.mp4

The research seminar