Organizational Learning in Rare Events: The Case of Learning to Litigate Intellectual Property (IP)

When organizations encounter rare events they often find it challenging to extract learning from the experience. We analyze opportunities for organizational learning in one such rare event, namely Intellectual Property (IP) litigation, i.e., when organizations take disputes regarding their intellectual property to court. We propose, that organizations can learn to litigate, although it is a rare event, by applying mechanisms in a current litigation case that have been successful in previous litigation cases. However, we also posit, that the usefulness of these learning mechanisms for a current litigation case is contingent on the type of litigation, contract versus infringement cases. If the organization is involved
in litigation based on a contract breach, we suggest that learning will be less useful because the contract preceding the litigation defines the modus operandi and leaves the organization little discretion to utilize any learning from past litigation success. Thus, learning appears be to most beneficial in infringement cases. Based on statistical analysis of 10,211 litigation court cases in China, we find support for our hypotheses. Our findings suggest that organizations can learn to litigate, although litigation is a relatively rare event, if they leverage what they have learned from previously successful litigations. However, learning is less likely to be applicable to contract cases than it will be in infringement cases.