Attack or Defend? The Role of Institutional Context on Patent Litigation Strategies

Abstract

Research has suggested that firms engage in a number of different patent strategies to protect and even gain competitive advantage. However, we know less about the strategies firms employ when engaging in patent litigation. Using proprietary and defensive generic patent strategies as a starting point, this paper describes two types of patent litigation strategies, the types of institutional contexts that would be expected to motivate firms to engage in each, and the performance outcomes of firms undertaking such strategies. Analyzing patent litigation activity between 2002 and 2008 in the pharmaceutical and semiconductor industries, we find that firms in the pharmaceutical industry are more likely to follow a proactive proprietary patent litigation strategy, while firms in the semiconductor industry are more likely to engage in a proactive defensive patent litigation strategy. Furthermore, firms in the semiconductor industry that followed a proactive defensive patent litigation strategy enjoyed better performance than firms that did not engage in this strategy.