Patent filing strategies and patent management: An empirical study

This book aims to address the increased complexity of the patent system. It presents three empirical studies that will enable managers, scholars, and policymakers to better interpret patenting activity. Such understanding is important since a misinterpretation of patenting activity leads to inefficient technology management in companies and to inadequate innovation policy. I analyze how the use (and abuse) of features of the patent system by private companies are related to patent filing motives. For this purpose, I analyze applications at the German patent office. It emerges that more than 50 percent of all filings involve applicant-induced delays. Further analysis reveals that the major reasons why firms cause these delays are to decrease the transparency of their own patent portfolios and to gain time to reevaluate the value of potential patent grants. Whereas patent applications that are withdrawn after reevaluation by the applicant create a lesser burden for the patent office, patents filed solely to decrease transparency give cause for concern because private and social welfare losses may result. An analysis of how the internal organization of patent management is related to firms' patent filing motives suggests that although filing motives are mostly driven by technology characteristics, some motives are also significantly associated with patent management structure. Many firms exhibit a highly professional patent management which is predominately guided by their senior executives. This group of firms attributes above-average importance to the strategic usage of patents, e.g. for decreasing the transparency of their patent portfolios or increasing their bargaining power. I also investigate the mechanics of patent arms races, which have been identified as a major reason for the increased complexity of the patent landscape in many sectors. My findings suggest that the perceived ineffectiveness of individual patents leads firms to file even more patents. Competitors are likely to react by increasing their patenting in turn. The result is a patent portfolio race, which can yield a suboptimal outcome in the long run. For managers, this means that increasing patent output may yield temporary advantages but can also create a dynamic similar to that of a price war, creating a potential prisoner's dilemma, which might decrease the effectiveness and efficiency of the innovation process.