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How Valuable are Patent Blocking Strategies?

Author

Listed:
  • Dirk Czarnitzki

    (KU Leuven
    Centre for European Economic Research (ZEW)
    KU Leuven)

  • Katrin Hussinger

    (KU Leuven
    University of Luxembourg
    Centre for European Economic Research (ZEW))

  • Bart Leten

    (KU Leuven
    Hasselt University)

Abstract

Firms use patents for blocking competitors’ innovation activities. Offensive blocking is a practice whereby firms patent alternatives of a focal invention preempting technological substitutes produced by competitors. Defensive blocking entails the creation of patent portfolios that block technologies in order to increase competitors’ willingness to trade patents. This paper examines the private value of both patent blocking strategies with the use of a novel measure of the offensive and defensive “blocking power” of patent portfolios. We show that both strategies increase firms’ market value. In discrete (complex) product industries, however, only offensive (defensive) patent blocking is associated with higher value.

Suggested Citation

  • Dirk Czarnitzki & Katrin Hussinger & Bart Leten, 2020. "How Valuable are Patent Blocking Strategies?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(3), pages 409-434, May.
    • Handle: RePEc:kap:revind:v:56:y:2020:i:3:d:10.1007_s11151-019-09710-9
    DOI: 10.1007/s11151-019-09710-9
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    Cited by:

    1. René Belderbos & Jinhyuck (Joseph) Park & Martin Carree, 2021. "Do R&D investments in weak IPR countries destroy market value? The role of internal linkages," Strategic Management Journal, Wiley Blackwell, vol. 42(8), pages 1401-1431, August.
    2. Hussingera, Katrin & Issahd, Wunnam, 2022. "Trade secret protection and R&D investment of family firms," ZEW Discussion Papers 22-039, ZEW - Leibniz Centre for European Economic Research.
    3. Linde Colen & René Belderbos & Stijn Kelchtermans & Bart Leten, 2024. "Many are called, few are chosen: the role of science in drug development decisions," The Journal of Technology Transfer, Springer, vol. 49(2), pages 492-517, April.
    4. Cowan, Robin & Jonard, Nicolas & Samson, Ruth, 2024. "Strategies of search and patenting under different IPR regimes," MERIT Working Papers 2024-008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Christoph Grimpe & Katrin Hussinger & Wolfgang Sofka, 2023. "Reaching beyond the acquirer-Target Dyad in M&A – Linkages to External knowledge sources and target firm valuation," DEM Discussion Paper Series 23-01, Department of Economics at the University of Luxembourg.

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    More about this item

    Keywords

    Patents; Patent blocking; Patent strategies; Offensive blocking; Defensive blocking; Market value;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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