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We study how different rules for allocating litigation costs impact on royalty negotiation when a non-practicing patent holder asserts its patent against a product developer.

A theoretical framework is proposed which distinguishes between three legal-cost allocation systems: the American system, where each party bears its own costs; the British system, where the loser incurs all costs; and the system favoring the defendant, where the defendant pays its own costs if it loses and nothing otherwise. The model considers both flat lawyer fees and contingency fees.

We first determine conditions under which, in the assumed contexts, the American system is preferable to the British one. Successively, we show that the less usual system favoring the defendant proves to be an interesting alternative.

In this way, in addition to extend the standard model of patent holdup, we furnish an analytical treatment of recent legislative proposals, such as the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act of 2013.

Scholars of business, economics, and law have long recognized that rights to intellectual property (IP) intimately shape innovative activity and the pursuit of profits. More than 60 years ago, Michal Polanyi voiced the following concerns about awarding property rights to creations of the “intellect”:The law…aims at a purpose which cannot be rationally achieved. It tries to parcel up a stream of creative thought into a series of distinct claims, each of which is to constitute the basis of a separately owned monopoly. But the growth of human knowledge cannot be divided into such sharply circumscribed phases. Ideas usually develop gradually by shades of emphasis, and even when, from time to time, sparks of discovery flare up and suddenly reveal a new understanding, it usually appears that the new idea has been at least partly foreshadowed in previous speculations. (Polanyi, 1944, pp. 70–71)

This paper focuses on the strategic inclusion of reciprocity clauses in the licensing commitments disclosed by firms claiming standard essential patents (SEPs) in the telecom industry. We highlight the main cost and benefit of using these clauses for SEPs holders, namely, a possible deterrence effect for potential standard users on the one hand, and a legal instrument to prevent holdup and negotiate cross-licenses with other SEPs owners on the other hand.

We formulate general hypotheses explaining firms’ disclosure strategies with respect to reciprocity clauses, and use an original dataset of 19,601 patent disclosures in 12 different ETSI (European Telecommunications Standard Institute) projects (including UMTS, GSM, 3GPP, or GPRS) to test them empirically.

Our econometric results first confirm our predictions that reciprocity clauses are used as an insurance mechanism in technologically complex environments. They are more frequently included in patent disclosures when the ownership of SEPs at the project level is more fragmented. We also find that firms do not claim reciprocity clauses before having already declared a significant number of non-reciprocal SEPs in the same project, which suggests a deterrence effect on standard users that must be balanced by a strong patent position.

Our findings highlight a trade-off for the SEPs holder to insert a reciprocity clause. There is both a cost and a benefit of adding this clause to the patent licensing commitment. Contrary to the usual literature on the subject, we do not analyze the general patenting strategies but the conducts on the licensing terms.

The purpose of this paper is to examine the impact of common ownership on corporate innovation, including innovation input, innovation output and postgrant patents.

This paper uses the ordinary least square model and the difference-in-differences technique to evaluate the effect of institutional interlocking shareholdings on the life cycle of corporate innovation.

The results show that common ownership impedes innovation measured by patent grants and citations through reduced R&D expenditures. However, common ownership protects postgrant patents by lowering the likelihood that a co-owned firm gets involved in patent litigation and by accelerating the settlement of lawsuits between co-owned firms.

From a regulatory perspective, common ownership in younger firms that rely heavily on R&D investment to produce innovation outputs is detrimental and needs to be regulated. However, common ownership in mature firms, which hold a big pool of patents or rely on acquiring patents to compete, is of less concern because of the protective role detected.

The paper provides a first comprehensive look into how same-industry common ownership affects innovation input, innovation output and postgrant patents. The research also reconciles the anticompetitive effect and the coordinative effect of common ownership documented in the literature.

The purpose of this paper is to explore the core elements and their constitutive activities of innovation of high-technology enterprises (HTEs) in the context of China to embrace effective management processes for dealing with standards setting.

The basic methodology of the empirical investigation is a single case study of ZTE Corporation (ZTE), a leading Chinese manufacturer in the telecommunication industry. Interviews were conducted from November 2008 to July 2009 with ZTE’s managers and senior R&D employees, as well as with R&D personnel from ZTE’s partners. Interviews were carried out face to face or by emails and supplemented by telephone calls and online communications. Secondary data provide complementary information.

The key to innovation for HTEs pursuing dominant positions in high-technology industries is standardization-oriented innovation. To deal with special requirements raised by the peculiarities of standardization for HTEs’ innovation management, HTEs need to emphasize three core elements in innovation, i.e. strategic innovation planning, internal R&D practices and external co-operative innovation, and focus on their key component activities. Moreover, through the case study of ZTE, three enabling factors for standardization-oriented innovation – intellectual property rights (IPR) management, market focus and co-operation along industry chains – are identified.

This paper is an attempt to understand and configure key innovation activities within a standards setting. It proposes a model for innovation management of HTEs in the Chinese economy, with three critical elements and their key constitutive activities being highlighted and three enabling factors being identified.

Extant research and practice of patent management are often occupied with how to best utilize patenting as a source of competitive advantage. The purpose of this paper is to suggest a patent management trichotomy where firms make strategic decisions between patenting, publishing, and secrecy.

The paper is conceptual in nature and draws on received IP management literature to develop an analytical framework.

The authors suggest that the choice between patenting, publishing, and secrecy can be understood in terms of differences in the degree to which the firm can appropriate value from the invention and the degree to which it can operate freely.

Through an analysis along the dimensions of direct and indirect appropriation as well as static and dynamic freedom to operate, the paper conceptualizes the choice between patenting, publishing, and secrecy in a way useful for managers as well as for academics.

The purpose of this paper is to analyze the impact of patenting on the performance of academic spin-off firms (ASOs) in the post-creation stage. Specifically, our study analyses how the combination of knowledge transfer mechanisms by ASOs and patents can foster ASOs’ early growth performance.

The authors explored the relations between patenting processes and spin-off performance through econometric methods applied to a broad sample of Italian ASOs. The research adopts a deductive approach, and the hypotheses are tested using panel data models by considering the sales growth rate as the dependent variable regressed over measures of patenting activity and quality and assuming that firm-specific unobservable drivers of growth are captured by random effects.

The empirical analysis shows that the incorporation of knowledge transferred by the parent university and academic founders through patents affects the performance of ASOs. Specifically, the authors find that the number of patents is a positive driver of ASOs’ performance, whilst patent age does not have a significant impact on growth. Moreover, spin-offs with a larger endowment of patents obtained before foundation, surprisingly, grow less on average.

The findings have implications for ASO founders by suggesting that patenting processes reap benefits. However, in the trade-off of external knowledge access vs internal knowledge protection, it may be better to begin patenting after the foundation of ASOs.

The authors enrich the on-going debate about the connections between knowledge transfer and organizational performance. This paper combines the concepts of patents and ASOs by providing evidence on the role of patenting processes as a transfer mechanism of explicit knowledge in ASOs. Furthermore, the authors contribute to the literature on costs and benefits of patents by hinting at unexpected findings.

The purpose of this paper is to investigate the technology, business and intellectual property issues surrounding the production of spare parts through additive manufacturing (AM) from a digital source. It aims to identify challenges to the growth of the AM spares market and propose suitable solutions.

The paper begins with a systematic literature review and theoretical analysis. This is followed by case study research through semi-structured interviews, forming the basis of a triangulated, cross-case analysis of empirical data.

The paper identifies several obstacles to the development of the AM-produced digital spares market. The manufacturing industry will soon be forced to re-think AM as a real manufacturing alternative. Short-term, AM technology has implications for the production of components for legacy systems for which tooling facilities no longer exist. Long-term, AM will be used to produce a wide range of components especially when product and/or service functionality can be increased. To enable companies to navigate current uncertainties in the patent framework (especially the “repair vs make” doctrine), new intellectual property rights strategies could be developed around patenting both complex devices and their individual components, and seeking patent protection for CAD files. Further harmonization of the EU legal framework, the interpretation of claims and the scope of protection offered in the context of spare parts, will also be important.

This study pinpoints key issues that need to be addressed within the European AM business environment and the patent system and proposes recommendations for business and legal frameworks to promote the growth of a stable European digital spare parts market.

Understanding a technology’s patent landscape, including patent strategies, helps organizations position themselves regarding their innovation and provides insight about a technology’s future direction. This study aims to provide an overview of the blockchain technology patenting trends and outlines an exploratory framework of patenting strategies for blockchain.

A total of 3,234 registered patents are analyzed to determine the geographical distribution and identify key actors patenting around the globe. In addition, an empirical study consisting of multiple case studies in the form of ten in-depth interviews with owners/managers of organizations based in North America was conducted to understand organizations’ strategies for patenting the blockchain technology.

Several novel insights regarding the strategies are used for blockchain technology patenting. For example, the existence of strong anti-patent sentiment which results in a lack of patenting by start-up organizations or has led to a form of open source patenting strategy. Larger organizations appear to be patenting defensively, and small to medium organizations are primarily patenting to defend their competitive advantage.

Start-up organizations harboring anti-patent sentiment should consider the open-source patenting strategy to ensure that the collaborative innovation network can continue. They should also consider collaborating with other actors within the network to have a competitive position in the market.

To the authors’ knowledge, this paper is the first to conduct an empirical study with organizations currently using the blockchain technology to understand patenting strategies used for blockchain.

Several causes may induce firm managers to analyze the actual technology condition of patent portfolios, among which is the need of exploiting patents strategically. In this paper, the question of how to support intellectual property (IP) managers of large high technology companies in their strategic decision-making process of evaluating patents is examined. The purpose of this paper is to provide a decision support framework that suggests the suitable exploitation strategy for patents.

The paper proposes an audit framework able to point out whether patents are aligned to the overall business strategy, to select those that are not aligned, and to identify the most appropriate exploitation strategy for each patent of the portfolio. The framework is structured into two phases: in the first one, patents are selected through the analysis of four dimensions that characterize the value of patents effectively; in the second one, a questionnaire is distributed to IP managers in order to support their decision on patents. The paper illustrates case-based applications of the framework.

Results of applications show that the framework is able to suggest IP managers the suitable exploitation strategy on four possible alternatives (maintaining, licensing, selling, abandoning) for each patent of their portfolios.

The framework is an innovative and valuable tool to IP managers, and besides its structural formulation, it is appreciable in terms of application expedition and efficiency of performance.