Authors: Riccardo Cappelli (University of Bologna), Marco Corsino (University of Bologna) and Salvatore Torrisi (University of Bologna)
Patents are increasingly important for reasons that go beyond protection of inventions from imitation, which is the traditional patent strategy. Many patents are not used commercially but generate rents by blocking rivals’ patents – a proprietary strategy. They can also be used to avoid the risk of being held-up by other patent owners or as a bargaining chip in litigation and cross-licensing – a defensive strategy. This paper empirically investigates how the choice of patent strategy varies with the characteristics of patent owners and the technological environment where patents originate. We exploit data from a large-scale survey of patent applications at the European Patent Office to test our research hypotheses. Multinomial logit estimates yield the following results: (i) a defensive strategy is more likely to be pursued for patents that protect complex technologies and, conditional on complexity, the probability of opting for this strategy increases with the firms’ sunk capital investment; (ii) a defensive patenting is also more likely when a firm faces competitors for the patent, but competition in the core technology of the firm makes a proprietary strategy more likely; (iii) a defensive strategy is more likely when the firm has a large patent portfolio.