The Impact of Online Platform IP Protection on New Product Sales: Evidence from the Alibaba

The rising digital economy and popularity of digital technologies present novel challenges to the IP regime but also provide novel chances to tackle it. This study examines a novel and unique IP protection initiative—Original Design Protection Program (ODPP) launched by Alibaba in 2018. ODPP employs cutting-edge artificial intelligence algorithms to issue digital certificates to those original products and enforce them within the platform. Leveraging this unique IP initiative, we examine the effectiveness of this IP protection regime initiated by the platform company and elucidate the precise impact of IP protection on product-level performance. Our analyses show that this platform-wide IP protection can significantly increase new product sales by at least 30%. This benefit is more pronounced for large sellers but not for those products with a high level of innovativeness. Further analyses reveal that the sales boost is partially due to restricting imitative entries, rather than displaying the digital certificates publicly. Our study provides granular level evidence on how IP protection impacts product sales in an online setting and these findings offer valuable insights for firms to manage their IPs in the digital era and for policymakers to consider IP regime reforms.