The paper develops and tests a theoretical framework explaining how emotions and learning affect outcomes of rare strategic events, namely Intellectual Property litigations. We investigate how organizations’ negative emotions influence performance outcome in IP litigations negatively. Though cumulative learning in rare strategic events is scarce, and cannot be understood through the standard framework of routines and capability development, we argue that firms may learn from rare events, and propose that learning moderates the negative effect of emotions. We test this utilizing data on all publically available IP litigation cases in China from 2001 to 2009 (n=13,030). We find that when
organizations undergo emotional negative stress they lose IP litigations more often, but development of roadmaps though past successes moderate the negative effects from emotional distress.