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Strategy scholars have documented in various empirical settings that firms seek and leverage stronger institutions to mitigate hazards and gain competitive advantage. In this paper, we argue that such “institution-seeking” behavior may not be confined to the pursuit of strong institutions: firms may also seek weak institutions to mitigate hazards. Using panel data from the global smartphone industry and recent patent wars among key industry rivals, we examine how smartphone vendors that are not directly involved in patent litigation strategically respond to increased litigation risks in this industry. We find that as patent wars intensify, smartphone vendors not involved in any litigation focus more of their business in markets with weaker intellectual property (IP) protection because of institutional arbitrage opportunities. This strategic response is more pronounced for vendors whose stocks of patents are small and whose home markets have weak-IP systems. Our study is the first to examine the relationship between heterogeneity in national patent systems and firms’ global strategies. It provides a more balanced view of firms’ institution-seeking behavior by documenting how they make strategic use of weaker institutions.

PurposeFirms may suffer differently from the patent thickets in a particular technology field. This paper explores how patent thickets affect the financial performance of firms with different patent propensities and technological leadership.Design/methodology/approachFrom the perspective of patent strategy, the authors study how patent propensity, the possibility that a firm applies for patents, affects the patent thickets and financial performance. Additionally, this paper uses patent stock to measure technological leadership, the degree to which a firm can develop, maintain and enhance technology and product innovation, to study the impact of patent propensity on firms. A three-way interaction model is used to explore the relationship among patent thickets, patent propensity, technological leadership and financial performance based on an unbalanced panel of 69 Chinese telecommunication equipment firms from 2008 to 2019.FindingsThe authors find that patent propensity positively moderates patent thickets and financial performance. Notably, technological leadership negatively moderates the moderating effect of patent propensity.Originality/valueThis paper enriches the heterogeneous literature of patent thickets and financial performance. It sheds light on the fact that firms with different technological leadership may use different patent strategies to cut through patent thickets.

We examine whether a firm’s intellectual property (IP) strategy in support of the open source software (OSS) community stimulates new OSS product entry by start-up software firms. In particular, we analyze the impact of strategic decisions taken by IBM around the mid-2000s, such as its announcement that it will not assert its patents against the OSS community and its creation of a patent commons. These decisions formed a coherent IP strategy in support of OSS. We find that IBM’s actions stimulated new OSS product introductions by entrepreneurial firms and that their impact is increasing in the cumulativeness of innovation in the market and the extent to which patent ownership in the market is concentrated. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2015.2247 . This paper was accepted by Lee Fleming, entrepreneurship and innovation .

From the perspective of intellectual property (IP) and antitrust law, the overriding question in the pharmaceutical industry is how to navigate the tradeoff between innovation and access. It is into this debate that William Feldman steps with his important article adapted from recent testimony before the Senate Judiciary Committee. Dr. Feldman discusses an array of anticompetitive behavior. In this response piece, I focus on “patent thickets” and “product hopping” to emphasize how they often harm consumers without any innovation justification and how they can be addressed.

Abstract Our study seeks to determine whether patent thickets covering biologic drugs are responsible for delayed biosimilar market entry. We compare patent assertions against the same biosimilar drugs across three countries. On average nine to twelve times more patents were asserted against biosimilars in the United States than in Canada and the United Kingdom. Biosimilars also enter the Canadian and UK markets more quickly than they do in the United States following regulatory approval. Later market entry is not a problem when the brand name drug company is asserting high quality patents (i.e. patents covering significant advances). Consequently, we drilled down into the U.S. patent portfolio of one major biologic, Abbvie's Humira drug, and found that it was made up of roughly 80% non-patentably distinct (duplicative) patents linked together by terminal disclaimers, which is permitted under United States Patent and Trademark Office (USPTO) rules. In contrast, there were far less non-duplicative European patents that covered Humira. Patent thickets can allow brand name drug companies to delay biosimilar entry by relying on the high cost of challenging many duplicative patents instead of the quality of their underlying patents. Accordingly, we suggest several policy interventions that may thin these biologic patent thickets.

With the growing complexity of innovation, numerous patentees with patents needed for corporate innovation can act as a forest of thorns for companies, often referred to as “Patent Thickets.” These thickets increase the patenting transaction costs and depreciate the company’s market value. However, few studies have examined the mechanism of patent thickets’s impact on firms’ market value in the Chinese context. Based on the patent and market value data of 419 high-tech enterprises in China, this study finds that patent thickets reduce the market value of a company. However, firms with more patent assets can better protect themselves from the depreciation caused by patent thickets by building up their R&D resources, enabling them to generate more of their patented assets internally. This reduces the costs of purchasing patents from outside sources and can enhance the firm’s market value. This study suggests that to mitigate the negative impact of the patent thickets on firms’ market value, firms must build up their R&D inventories. By doing so, they can acquire more patents in-house, thereby protecting their patent rights.

Plant related innovations are critical to enable of food security and mitigate climate change. New breeding technologies (NBTs) based on emerging genome editing technologies like CRISPR/Cas will facilitate “breeding-by-editing” and enable complex breeding targets—like climate resilience or water use efficiency—in shorter time and at lower costs. However, NBTs will also lead to an unprecedented patent complexity. This paper discusses implications and potential solutions for open innovation models.

New research and a government investigation have shed light on an anticompetitive practice called “Product Hopping” and specifically how it was employed in the case of the multiple sclerosis treatment glatiramer acetate beginning in 2014, which cost payers billions of dollars. We examine this case as well as a separate, impending instance of product hopping.

Patent thickets are sets of overlapping intellectual property rights that occur in fragmented technology markets. Their potential impacts on innovation have become an increasing concern in recent years. I estimate the direct and indirect effects of patent thickets on market value of publicly traded manufacturing firms. I find that patent thickets decrease the market value of firms, holding R&D and patenting activities of these firms constant. I also find that while firms do not change their R&D activities in response to patent thickets, they do reduce negative cost effects of patent thickets on market value through defensive patenting.

Big pharma ’s business model, which relies on a few blockbusters to generate profits, is clearly broken. Patent expiration on numerous blockbusters in recent years is already altering the drug landscape. Drug companies are also facing other challenges that necessitate development and implementation of novel R&D strategies, including those that focus on nanotechnology and miniaturization. Clearly, there is enormous excitement and expectation regarding nanomedicine ’s potential impact. However, securing valid and defensible patent protection will be critical. Although early forecasts for nanomedicine commercialization are encouraging, there are numerous bottlenecks as well. One of the major hurdles is an emerging thicket of patent claims, resulting primarily from patent proliferation as well as continued issuance of surprisingly broad patents by the US Patent and Trademark Office (PTO). Adding to this confusion is the fact that the US National Nanotechnology Initiative ’s widely cited definition of nanotechnology is inaccurate and irrelevant from a nanomedicine perspective. It is also the cause of the inadequate patent classification system that was recently unveiled by the PTO. All of this is creating a chaotic, tangled patent landscape in various sectors of nanomedicine where the competing players are unsure of the validity and enforceability of numerous issued patents. If this trend continues, it could stifle competition and limit access to some inventions. Therefore, reforms are urgently needed at the PTO to address problems ranging from poor patent quality and questionable examination practices to inadequate search capabilities, rising attrition, poor employee morale and a skyrocketing patent application backlog. Only a robust patent system will stimulate the development of commercially viable nanomedicine products that can drastically improve a patient ’s quality of life and reduce healthcare costs.