Publications
Publications
- 2006
Does Competition Increase Patent Litigation? Empirical Evidence of Strategic Patenting in the Telecom Equipment Industry
By: Juan Alcacer and Rachelle C. Sampson
Abstract
Anecdotal evidence suggests that patent litigation has increased in the last 20 years as firms in knowledge intensive industries use patents more frequently to protect their knowledge stocks and managers focus on extracting new revenue streams from existing patent portfolios. For example, small firms within the semiconductor industry, which are "technology specialists," increasingly use patent litigation to ensure exclusive control over proprietary technologies (Ziedonis, 2004). Further, firms are increasingly patenting not only to protect technologies from imitation, but also to use solely as a defense against possible future litigation (Shell, 2004). In spite of the strategic value that patents have, most research on innovation and strategy views patents as a measure of technological capabilities rather than as a strategic tool. Moreover, patent citations have been widely used as a signal of knowledge flows between and within firms. This interpretation, which minimizes the role that citations may have on patent litigation, has been challenged in recent papers. We follow this emerging literature and explore whether and how firms strategically cite competitors' patents to minimize or provide a defense against infringement suits. By combining data on a firm's citations of its competitors with information on patent litigation in the telecommunications equipment industry, we examine whether increased citations of a competitor increases or decreases the likelihood that a firm's patent is litigated. We argue that those patents where examiners add a significant number of citations are more likely to be litigated in court because the added citations will flag competitors of the potential overlap with their patents. Based on previous research, we also expect that small firms are the most likely to file a suit, since a large proportion of their revenues are likely linked to individual patents. Successful defense of patents is likely more crucial to the survival of the small firm than to larger, more diversified firms. Via this examination, we hope to better understand the strategic motivations behind a firm's patenting activities.
Keywords
Citation
Alcacer, Juan, and Rachelle C. Sampson. "Does Competition Increase Patent Litigation? Empirical Evidence of Strategic Patenting in the Telecom Equipment Industry." 2006. (Presented at Academy of Management Annual Meeting in Honolulu, HI, August 2005.)