Somaya, D. (2012), “Patent strategy and management: An integrative review and research agenda”

Question 1

The three main activity domains of patent strategy:

Answer 1

• Rights creation,
• Rights licensing, and
• Rights enforcement

Question 2

What are the three generic patent strategies?

Answer 2

Proprietary strategy

Defensive strategy

Leveraging strategy

Question 3

Describe the four issues related to strategic management of patents:

Answer 3

Real options: Firms can delay, renew, abandon, or expand patents depending on how the market or technology evolves.

Signaling and information disclosure: Firms use patents (or disclosures) to attract investors, partners, or deter rivals by shaping perceptions and expectations.

Nonmarket strategies in patents: Patent value depends on legal frameworks, so firms may lobby, forum shop, or engage with regulators to shape outcomes.

Patent management capabilities: Building internal skills (e.g., in-house counsel, IP teams) improves how firms generate, manage, and enforce patents.

Question 4

Describe the generic patent strategy “proprietary strategy”.

Answer 4

Proprietary Strategy

Goal: To create and sustain a competitive advantage by excluding rivals and protecting key inventions from imitation.

How it works: Firms use patents as strong isolating mechanisms by building fences, preemptively patenting substitute or follow-on technologies, and tightly controlling licensing.

Key traits:
- Patent fences/thickets to block competitors
- Rarely license to others (unless to commercialization partners with complementary assets)
- Aggressively enforce patents through litigation

Best used when:
- The firm has high strategic stakes in a core technology
- Licensing cannot protect competitive advantage
- Inventions create significant market opportunities (e.g. valuable new drugs)
- Technology with few close substitutes

Question 5

Describe the generic patent strategy “defensive strategy”.

Answer 5

Defensive Strategy

Goal: To protect the firm from being sued or blocked by others’ patents — in other words, to maintain freedom to operate.

How it works: Firms build large patent portfolios to use as bargaining chips (e.g., cross-licensing) or preempt others from patenting.

Key traits:
- Patents acquired to deter lawsuits
- Use of cross-licensing, patent pools
- May disclose inventions, file oppositions, or reexaminations to invalidate risky patents

Best used when:
- Firms face multi-invention products or fragmented IP ownership, especially in fast-moving industries (e.g., semiconductors).

Question 6

Describe the generic patent strategy “leveraging strategy”.

Answer 6

Leveraging Strategy

Goal: To extract value from patents without necessarily using them to produce goods — i.e., for licensing revenues, negotiations, or influence.

How it works: Firms license patents, use patent rights as bargaining tools to generate revenue or secure favorable positions (e.g., in standards or supply deals).

Key traits:
- Licensing patents outside core areas
- Litigation threats used as leverage
- Often associated with NPEs (“patent trolls”) or firms with asymmetric power

Best used when:
- The firm has non-core patents, operates in licensing-friendly markets, or seeks to monetize IP without commercializing.