The Effects of Patent Litigation Involving NPEs on Firms' Patent Strategies

Abstract

Considering patent disputes with non-practicing entities (NPEs) as facilitators of change in existing patent strategies, this study analyzed their effects on the patent strategies of firms subsequent to lawsuits. After experiencing litigation with NPEs as defendants, the study focused on patent creation among the patent strategy. We mainly examine the types of patents filed by the affected firms, where they are applied, and how they are obtained. With a sample of 653 patent lawsuits in the U.S. medical device industry, the study used the generalized method of moments (GMM) to test the influence of litigation involving NPEs on patenting activities at the firm level. The results suggest that firms that are in litigation involving NPEs are more likely to broaden the scope of their searches, and to apply for patents in a wider range of areas, which is achieved through co-patenting and the acquisition of patents from the technology market.