Patent strategies: traditional, proprietary and defensive

The increasing importance of patents for firm strategy goes beyond the protection of inventions from imitation (traditional strategy). Patenting can generate rents by blocking the commercial endeavor of rivals (proprietary strategy) or avoiding the risk of being held-up by other patent owners (defensive strategy). This paper empirically investigates how the choice of patent strategy varies with the characteristics of patent owners and the technological environment where patents originate. We exploit data from a large-scale survey of patent applications at the European Patent Office to test our research hypotheses. Multinomial logit estimates yield the following results: (i) a defensive strategy is more likely to be pursued for patents that protect complex technologies and, conditional on complexity, the probability of opting for this strategy increases with the firms’ sunk capital investment; (ii) defensive patenting is also more likely when a firm faces competitors for the patent; (iii) a traditional strategy is more likely when the patented technology is closer to the firm’s core technologies; (iv) the likelihood of proprietary and defensive patenting increases with the number of overlapping claims with earlier patents