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Patent litigation consists of non-market actions that firms undertake to access intellectual property rights defined by prior legislation and enforced by the courts. Thus, patent litigation provides an interesting context in which to explore aspects of firm’s non-market strategies. In contrast with prior non-market strategy research that has largely focused on how political institutions define the rules of the game for market competition, non-market actions within patent litigation primarily seek to access and apply these broad policies to specific situations, products, or assets that matter to the firm. Furthermore, because such non-market actions are directly influenced by the firms’ market strategies, they represent a promising area for research on integrated (market and non-market) strategies as well.

The goal of this paper is to explain how generic patent strategies that firms use to support their competitive advantage in the product-market influence non-market outcomes related to the timing of patent litigation resolution. In contrast with prior research that has studied settlement in patent litigation essentially as a one-shot bargaining game, this paper seeks to explain litigation resolution as an outcome of the competing mechanisms of settlement and adjudication that operate continually during litigation. Using a large sample of patent litigations in research medicines and computers, I model the timing of patent litigation resolution in a proportional hazards framework, wherein settlement and adjudication are competing risks. The evidence found is consistent with the proposition that the speed with which patent litigation is resolved by either settlement or adjudication reflects the use of proprietary, defensive, and leveraging patent strategies by firms. These findings also help to explain unexpected and anomalous findings regarding the settlement of patent litigation reported in prior research.

Patent litigation has been rising rapidly in the United States since the mid-1980s, and particularly so in high-technology industries. The strategies pursued by firms with their patents have a significant influence on their decisions to file suit, and on the outcomes within litigation. The influence of strategic motivations on settlement outcomes is studied in two illustratively different industries – computers and research medicines. Evidence is found for two types of influences – the use of patents (as isolating mechanisms) to protect valuable strategic stakes, and their “defensive” role in obtaining access to external technologies (through mutual hold-up).

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 chapter examines the role of “continuations” (procedural revisions of patent applications) within software patents and overall patenting in the United States during 1987–1999. Our research represents the first effort of which we are aware to analyse data on continuations in software or any other patent class, and as such provides information on the effects of 1995 changes in the U.S. patent law intended to curb “submarine patenting.” Our analysis of all U.S. patents issued 1987–1999 shows that the use of continuations grew steadily in overall U.S. patenting through 1995, with particularly rapid growth in continuations in software patenting. Sharp reversals in these growth rates after 1995 suggest that changes in the U.S. patent law were effective. Continuations were used more intensively by packaged-software firms prior to the effective date of the 1995 changes in patent law than by other patentees, and both software and non-software patents subject to continuation tend to be more valuable.

Purpose – This chapter examines the licensing behavior of patent pools when they are unconstrained by antitrust rules.

Design/methodology/approach – Patent pools allow competing firms to combine their patents and license them as a package to outside firms. Regulators today favor pools that license their patents freely to outside firms, making it difficult to observe the unconstrained licensing strategies of patent pools. This chapter takes advantage of a unique period of regulatory tolerance during the New Deal to investigate the unconstrained licensing decisions of pools. Archival evidence suggests that – in the absence of regulation – pools may not choose to license their technologies.

Findings/originality/value – Eleven of twenty pools that formed between 1930 and 1938 did not issue any licenses to outside firms. Three pools granted one, two, and three licenses, respectively, to resolve litigation. Six pools issued between 9 and 185 licenses. Archival evidence suggests that the pools studied in this chapter used licensing as a means to limit competition with substitute technologies.

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.

Firms have typically tried to profit from their technical innovations by selling them indirectly, embedded in goods and services. Markets for technology, in which innovations are sold or licensed, have been much rarer. Yet, trade in technology has grown systematically over the past 20 years, as reflected in the growth of arrangements such as licensing agreements, R&D joint ventures, and contract R&D. Recent estimates indicate that royalties received by American corporations for industrial processes may amount to about a quarter of total U.S. R&D. A number of supporting institutions that facilitate effective dissemination of information, standardization, and contracting are vital to the rise and functioning of markets for technology. Intellectual property rights, and in particular patents, are one such institution. The main objectives of this survey are to review critically the literature on the relationship between trade in technology and patent protection, and to assess the contribution of stricter and better-defined patent protection to the emergence of technology markets. We start our survey by providing a tentative taxonomy of markets for technology and some recent evidence on their extent and evolution. We then explore several reasons why firms would be willing to act as suppliers in the market for technology. The core of the survey revolves around the idea that patents facilitate the development of markets for technology in several ways: They enhance the ability of the licensor to extract rents from its innovation; they reduce costs in technology trade by forcing an increased codification of knowledge; they reduce information asymmetries, opportunistic behaviors, and transaction costs. However, the literature also points to some potential costs of stronger patents, including litigation costs and the problem of “anti-commons.” Finally, we explore the implications of patents and markets for technology for entry, competition and industry dynamics.

This chapter focuses upon two types of interaction. One is the interaction between departments within the Danish Trademark and Patent Office (DKPTO). Additionally, the interaction between the DKPTO and firms is analysed. The chapter discusses in what ways an institution like a national patent office is important for product innovation, not just by providing an appropriability system for product innovations in firms, but additionally by improving the long-run capabilities of both firms and the DKPTO itself. The research builds upon interviews in the DKPTO, case stories from firms and of patent granting procedures.

With respect to internal competencies, it is found that no efforts were carried out to create environments for learning between the departments in line with the “learning organizations” described in earlier chapters. However, taking the tasks of the departments into account, the need for such efforts was not obvious. Links to external organizations are not only confined to industrial firms. Many firms, especially the large firms, would not mind if the tasks of the national patent system were moved to the EPO-level. On the other hand, in particular, small, new firms may feel more confident with a national patent office.

Prior research suggests that patents by mobile inventors are at higher risk of generating spillovers between departed and hiring firms. Despite extensive research on how inter-firm inventor mobility affects firms' learning and innovation, little is known about how firms protect their existing intellectual property in the face of inter-firm inventor mobility. We argue that one main way in which firms try to prevent others from appropriating the value of these inventions is by extending the validity of mobile inventors' patents. We derive a set of hypotheses consistent with this argument and test them using longitudinal data on four major American semiconductor firms. Our analyses show that, as hypothesized, both departed and hiring firms are more likely to extend the validity of mobile inventors' patents than is the case for the patents of other, non-mobile inventors. Furthermore, in line with the view that firms use patent renewal to deter other firms from appropriating mobile inventors' knowledge, we find this effect to be stronger where the risks of spillovers are most intense. Our findings extend prior literature by explicating the role of patent renewal as a strategic deterrent against intellectual property appropriation in the face of inter-firm inventor mobility.

In this chapter a typology is presented that typically describes strategic patent management practices in four development categories. The underlying framework integrates patent functions with strategic planning attitudes. Policy makers can apply it to survey the actual use of patents in order to identify the potential for improvement in SME-owned patent exploitation. Managers of these organisations can use it to evaluate the current patent management practice for taking the next step towards a more active use of patents. Operationalisation of the framework into a questionnaire is grounded in a pilot study of three biotechnology firms, differing in size and age. The result has consequently been applied in a case study consisting of 16 small-sized biopharmaceutical companies in the Netherlands. After presenting results from this sample of patent management practices, we present our findings and discuss the validity and use of the typology for the above-mentioned purposes.