IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v160y2020ics004016252031060x.html
   My bibliography  Save this article

Obtaining certainty vs. creating uncertainty: Does firms’ patent filing strategy work as expected?

Author

Listed:
  • Zhang, Gupeng
  • Xiong, Libin
  • Duan, Hongbo
  • Huang, Dujuan

Abstract

Based on a dataset from China that covers 426,512 invention patents, this study investigates firms’ patent filing strategy embedded in the examination request lag and tests their effectiveness. Based on survival model and Probit model, we employ the patent renewal and invalidation data to test the market's reactions and rivals’ counteractions, respectively. The results show that to obtain certainty, firms tend to intentionally delay their examination request for potentially valuable patents. This delay may be effective in enabling the firms to obtain a higher realized value from their patent right in China. To create uncertainty for rivals, firms may intentionally delay the examination request and simultaneously file a large number of patents. Firms also tend to delay the examination request in either new technology fields or technology fields in which patent filings increase rapidly, with the intention of dealing with the external uncertainty. However, rivals may counteract these delays by appealing for patent invalidations, which may lead to an efficiency loss in the patent system. We discuss these results in the specific legal and market contexts of China.

Suggested Citation

  • Zhang, Gupeng & Xiong, Libin & Duan, Hongbo & Huang, Dujuan, 2020. "Obtaining certainty vs. creating uncertainty: Does firms’ patent filing strategy work as expected?," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:tefoso:v:160:y:2020:i:c:s004016252031060x
    DOI: 10.1016/j.techfore.2020.120234
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S004016252031060X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2020.120234?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mark A. Lemley & Carl Shapiro, 2005. "Probabilistic Patents," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 75-98, Spring.
    2. Markus Reitzig & Phanish Puranam, 2009. "Value appropriation as an organizational capability: the case of IP protection through patents," Strategic Management Journal, Wiley Blackwell, vol. 30(7), pages 765-789, July.
    3. Kenneth Zahringer & Christos Kolympiris & Nicholas Kalaitzandonakes, 2018. "Erratum to: Time to patent at the USPTO: the case of emerging entrepreneurial firms," The Journal of Technology Transfer, Springer, vol. 43(4), pages 1107-1119, August.
    4. Yoshifumi Nakata & Xingyuan Zhang, 2012. "A survival analysis of patent examination requests by Japanese electrical and electronic manufacturers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(1), pages 31-54, October.
    5. Andrew Eckert & Corinne Langinier, 2014. "A Survey Of The Economics Of Patent Systems And Procedures," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 996-1015, December.
    6. Yamauchi, Isamu & Nagaoka, Sadao, 2015. "Does the outsourcing of prior art search increase the efficiency of patent examination? Evidence from Japan," Research Policy, Elsevier, vol. 44(8), pages 1601-1614.
    7. Yutaka Niidome, 2017. "The relation of patent description and examination with validity: an empirical study," Scientometrics, Springer;Akadémiai Kiadó, vol. 111(1), pages 159-183, April.
    8. Carl Shapiro, 2008. "Patent Reform: Aligning Reward and Contribution," NBER Chapters, in: Innovation Policy and the Economy, Volume 8, pages 111-156, National Bureau of Economic Research, Inc.
    9. Jussi Heikkilä & Michael Verba, 2018. "The role of utility models in patent filing strategies: evidence from European countries," Scientometrics, Springer;Akadémiai Kiadó, vol. 116(2), pages 689-719, August.
    10. Antoine Dechezleprêtre & Yann Ménière & Myra Mohnen, 2017. "International patent families: from application strategies to statistical indicators," Scientometrics, Springer;Akadémiai Kiadó, vol. 111(2), pages 793-828, May.
    11. Reitzig, Markus & Henkel, Joachim & Heath, Christopher, 2007. "On sharks, trolls, and their patent prey--Unrealistic damage awards and firms' strategies of "being infringed"," Research Policy, Elsevier, vol. 36(1), pages 134-154, February.
    12. Bruno van Pottelsberghe de la Potterie, 2011. "The quality factor in patent systems," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 20(6), pages 1755-1793, December.
    13. Stuart J.H. Graham & Alan C. Marco & Richard Miller, 2018. "The USPTO Patent Examination Research Dataset: A window on patent processing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(3), pages 554-578, September.
    14. Johnson, Daniel K N & Popp, David, 2003. "Forced Out of the Closet: The Impact of the American Inventors Protection Act on the Timing of Patent Disclosure," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 96-112, Spring.
    15. Hu, Albert G.Z. & Zhang, Peng & Zhao, Lijing, 2017. "China as number one? Evidence from China's most recent patenting surge," Journal of Development Economics, Elsevier, vol. 124(C), pages 107-119.
    16. Blind, Knut & Cremers, Katrin & Mueller, Elisabeth, 2009. "The influence of strategic patenting on companies' patent portfolios," Research Policy, Elsevier, vol. 38(2), pages 428-436, March.
    17. Natarajan Balasubramanian & Jagadeesh Sivadasan, 2011. "What Happens When Firms Patent? New Evidence from U.S. Economic Census Data," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 126-146, February.
    18. Carl Shapiro, 2001. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," NBER Chapters, in: Innovation Policy and the Economy, Volume 1, pages 119-150, National Bureau of Economic Research, Inc.
    19. Manish Srivastava & Tang Wang, 2015. "When does selling make you wiser? Impact of licensing on Chinese firms’ patenting propensity," The Journal of Technology Transfer, Springer, vol. 40(4), pages 602-628, August.
    20. Joshua S. Gans & David H. Hsu & Scott Stern, 2008. "The Impact of Uncertain Intellectual Property Rights on the Market for Ideas: Evidence from Patent Grant Delays," Management Science, INFORMS, vol. 54(5), pages 982-997, May.
    21. Zhang, Gupeng & Lv, Xiaofeng & Zhou, Jianghua, 2014. "Private value of patent right and patent infringement: An empirical study based on patent renewal data of China," China Economic Review, Elsevier, vol. 28(C), pages 37-54.
    22. Bart Leten & Rene Belderbos & Bart Van Looy, 2016. "Entry and Technological Performance in New Technology Domains: Technological Opportunities, Technology Competition and Technological Relatedness," Journal of Management Studies, Wiley Blackwell, vol. 53(8), pages 1257-1291, December.
    23. Pierre Régibeau & Katharine Rockett, 2010. "Innovation Cycles And Learning At The Patent Office: Does The Early Patent Get The Delay?," Journal of Industrial Economics, Wiley Blackwell, vol. 58(2), pages 222-246, June.
    24. Berger, Florian & Blind, Knut & Thumm, Nikolaus, 2012. "Filing behaviour regarding essential patents in industry standards," Research Policy, Elsevier, vol. 41(1), pages 216-225.
    25. Bessen, James, 2008. "The value of U.S. patents by owner and patent characteristics," Research Policy, Elsevier, vol. 37(5), pages 932-945, June.
    26. Yang, Deli & Sonmez, Mahmut (Maho), 2018. "Global norm of national treatment for patent uncertainties: A longitudinal comparison between the US and China," Journal of World Business, Elsevier, vol. 53(2), pages 164-176.
    27. Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters, in: R&D, Patents, and Productivity, pages 73-88, National Bureau of Economic Research, Inc.
    28. Liegsalz, Johannes & Wagner, Stefan, 2013. "Patent examination at the State Intellectual Property Office in China," Research Policy, Elsevier, vol. 42(2), pages 552-563.
    29. Popp David & Juhl Ted & Johnson Daniel K.N., 2004. "Time In Purgatory: Examining the Grant Lag for U.S. Patent Applications," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-45, November.
    30. Zhang, Gupeng & Zhou, Jianghua, 2016. "The effects of forward and reverse engineering on firm innovation performance in the stages of technology catch-up: An empirical study of China," Technological Forecasting and Social Change, Elsevier, vol. 104(C), pages 212-222.
    31. Ying Xie & David Giles, 2011. "A survival analysis of the approval of US patent applications," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1375-1384.
    32. Rita Gunther McGrath & Atul Nerkar, 2004. "Real options reasoning and a new look at the R&D investment strategies of pharmaceutical firms," Strategic Management Journal, Wiley Blackwell, vol. 25(1), pages 1-21, January.
    33. Palangkaraya, Alfons & Jensen, Paul H. & Webster, Elizabeth, 2008. "Applicant behaviour in patent examination request lags," Economics Letters, Elsevier, vol. 101(3), pages 243-245, December.
    34. Patel, Darshak & Ward, Michael R., 2011. "Using patent citation patterns to infer innovation market competition," Research Policy, Elsevier, vol. 40(6), pages 886-894, July.
    35. Whalen, Ryan, 2018. "Boundary spanning innovation and the patent system: Interdisciplinary challenges for a specialized examination system," Research Policy, Elsevier, vol. 47(7), pages 1334-1343.
    36. Tong, Tony W. & Zhang, Kun & He, Zi-Lin & Zhang, Yuchen, 2018. "What determines the duration of patent examination in China? An outcome-specific duration analysis of invention patent applications at SIPO," Research Policy, Elsevier, vol. 47(3), pages 583-591.
    37. Deepak Hegde & Hong Luo, 2018. "Patent Publication and the Market for Ideas," Management Science, INFORMS, vol. 64(2), pages 652-672, February.
    38. Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-784, July.
    39. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    40. Harhoff, Dietmar & Reitzig, Markus, 2004. "Determinants of opposition against EPO patent grants--the case of biotechnology and pharmaceuticals," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 443-480, April.
    41. Greg Linden & Deepak Somaya, 2003. "System-on-a-chip integration in the semiconductor industry: industry structure and firm strategies," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(3), pages 545-576, June.
    42. Hall, Bronwyn H & Ziedonis, Rosemarie Ham, 2001. "The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 101-128, Spring.
    43. Burke, Paul F. & Reitzig, Markus, 2007. "Measuring patent assessment quality--Analyzing the degree and kind of (in)consistency in patent offices' decision making," Research Policy, Elsevier, vol. 36(9), pages 1404-1430, November.
    44. Deng, Yi, 2007. "Private value of European patents," European Economic Review, Elsevier, vol. 51(7), pages 1785-1812, October.
    45. Hun Lee & Ken G. Smith & Curtis M. Grimm & August Schomburg, 2000. "Timing, order and durability of new product advantages with imitation," Strategic Management Journal, Wiley Blackwell, vol. 21(1), pages 23-30, January.
    46. Dietmar Harhoff & Stefan Wagner, 2009. "The Duration of Patent Examination at the European Patent Office," Management Science, INFORMS, vol. 55(12), pages 1969-1984, December.
    47. Yamauchi, Isamu & Nagaoka, Sadao, 2015. "An economic analysis of deferred examination system: Evidence from a policy reform in Japan," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 19-28.
    48. Yang, Deli, 2008. "Pendency and grant ratios of invention patents: A comparative study of the US and China," Research Policy, Elsevier, vol. 37(6-7), pages 1035-1046, July.
    49. Duan, Hongbo & Zhang, Gupeng & Wang, Shouyang & Fan, Ying, 2018. "Peer interaction and learning: Cross-country diffusion of solar photovoltaic technology," Journal of Business Research, Elsevier, vol. 89(C), pages 57-66.
    50. Nicolas van Zeebroeck, 2007. "Patents only live twice: a patent survival analysis in Europe," Working Papers CEB 07-028.RS, ULB -- Universite Libre de Bruxelles.
    51. Mark Schankerman, 1998. "How Valuable is Patent Protection? Estimates by Technology Field," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 77-107, Spring.
    52. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, vol. 112(478), pages 97-116, March.
    53. James Bessen & Michael J. Meurer, 2005. "The Patent Litigation Explosion," Working Papers 0501, Research on Innovation.
    54. Kenneth Zahringer & Christos Kolympiris & Nicholas Kalaitzandonakes, 2018. "Time to patent at the USPTO: the case of emerging entrepreneurial firms," The Journal of Technology Transfer, Springer, vol. 43(4), pages 923-952, August.
    55. Rosemarie Ham Ziedonis, 2004. "Don't Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms," Management Science, INFORMS, vol. 50(6), pages 804-820, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Higham, Kyle & de Rassenfosse, Gaétan & Jaffe, Adam B., 2021. "Patent Quality: Towards a Systematic Framework for Analysis and Measurement," Research Policy, Elsevier, vol. 50(4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrew Eckert & Corinne Langinier, 2014. "A Survey Of The Economics Of Patent Systems And Procedures," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 996-1015, December.
    2. Zhu, Kejia & Malhotra, Shavin & Li, Yaohan, 2022. "Technological diversity of patent applications and decision pendency," Research Policy, Elsevier, vol. 51(1).
    3. Cesare Righi & Davide Cannito & Theodor Vladasel, 2023. "Continuing Patent Applications at the USPTO," Working Papers 1382, Barcelona School of Economics.
    4. Kenneth Zahringer & Christos Kolympiris & Nicholas Kalaitzandonakes, 2018. "Time to patent at the USPTO: the case of emerging entrepreneurial firms," The Journal of Technology Transfer, Springer, vol. 43(4), pages 923-952, August.
    5. Cesare Righi & Davide Cannito & Theodor Vladasel, 2023. "Continuing patent applications at the USPTO," Economics Working Papers 1855, Department of Economics and Business, Universitat Pompeu Fabra.
    6. Tong, Tony W. & Zhang, Kun & He, Zi-Lin & Zhang, Yuchen, 2018. "What determines the duration of patent examination in China? An outcome-specific duration analysis of invention patent applications at SIPO," Research Policy, Elsevier, vol. 47(3), pages 583-591.
    7. Righi, Cesare & Cannito, Davide & Vladasel, Theodor, 2023. "Continuing patent applications at the USPTO," Research Policy, Elsevier, vol. 52(4).
    8. Yang, Haodong & Zhang, Yumei & Liu, Li, 2024. "Patent priority examination under mission orientation: can speed and quality coexist?," Technology in Society, Elsevier, vol. 76(C).
    9. Jussi Heikkilä & Michael Verba, 2018. "The role of utility models in patent filing strategies: evidence from European countries," Scientometrics, Springer;Akadémiai Kiadó, vol. 116(2), pages 689-719, August.
    10. Schwiebacher, Franz, 2013. "Does fragmented or heterogeneous IP ownership stifle investments in innovation?," ZEW Discussion Papers 13-096, ZEW - Leibniz Centre for European Economic Research.
    11. Liegsalz, Johannes & Wagner, Stefan, 2013. "Patent examination at the State Intellectual Property Office in China," Research Policy, Elsevier, vol. 42(2), pages 552-563.
    12. Ting Meng & Richard Carew & Wojciech J. Florkowski, 2020. "Determinants of the grant lag and the surrender lag of horticultural crop plant breeders’ rights applications: Survival analysis with competing risks," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(4), pages 489-512, December.
    13. Appio, Francesco Paolo & Baglieri, Daniela & Cesaroni, Fabrizio & Spicuzza, Lucia & Donato, Alessia, 2022. "Patent design strategies: Empirical evidence from European patents," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    14. Carlos J. Serrano & Rosemarie Ziedonis, 2018. "How Redeployable are Patent Assets? Evidence from Failed Startups," NBER Working Papers 24526, National Bureau of Economic Research, Inc.
    15. Johannes Koenen & Martin Peitz, 2012. "The Economics of Pending Patents," Chapters, in: Joseph E. Harrington Jr & Yannis Katsoulacos (ed.), Recent Advances in the Analysis of Competition Policy and Regulation, chapter 3, Edward Elgar Publishing.
    16. Gupeng, Zhang & Xiangdong, Chen, 2012. "The value of invention patents in China: Country origin and technology field differences," China Economic Review, Elsevier, vol. 23(2), pages 357-370.
    17. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 315-380, Elsevier.
    18. Dr Chiara Rosazza Bondibene, 2012. "A Study of Patent Thickets," National Institute of Economic and Social Research (NIESR) Discussion Papers 401, National Institute of Economic and Social Research.
    19. Chung, Jiyoon & Lorenz, Annika & Somaya, Deepak, 2019. "Dealing with intellectual property (IP) landmines: Defensive measures to address the problem of IP access," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    20. Chondrakis, George, 2016. "Unique synergies in technology acquisitions," Research Policy, Elsevier, vol. 45(9), pages 1873-1889.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:160:y:2020:i:c:s004016252031060x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.