Market share and firms’ patent exploitation

As the current patent policy encourages the early stage of innovation but imposes hardly any regulations on how patent holders use their patents, an understanding of how firms use their patents is largely lacking. In this study, we seek to determine whether differences exist in firms’ strategies for utilizing patents depending on their market share. Using a discrete choice model, the repeated multinomial logit model, we analyzed Korean firms’ choices of patent use. Market share is found to positively influence three patent exploitation modes: own use, simultaneous exploitation of own use and licensing, and blocking. And the blocking use of patents is the most significant mode that is positively associated with market share. Our results provide a basis for understanding the effects of patent policy from the industrial perspective, such as industrial organization or competition policy. We discussed the implications for various actors related to patent systems, including researchers, policy-makers, and practitioners.