A preemptive power to offensive patent litigation strategy: Value creation, transaction costs and organizational slack

Abstract

Offensive patent litigation is an increasingly important part of the firm's corporate strategy to protect the values of its intellectual property rights. Building on the value creation and transaction costs perspectives, this study explores how the preemptive power is most important to a firm's offensive patent litigation strategy through two key mechanisms. By applying an experimental design method to develop scenarios for top executives of publicly-traded companies and small- and medium-sized enterprises, the results show that both the patents' value creation based on their transaction costs and market positions influence the propensity of preemptive power separately through perceived benefits and organizational slack, and accordingly affect the offensive patent litigation strategy. These findings not only broaden the resource-based, transaction cost and value creation explanations of offensive patent litigation decisions, but also facilitate the formulation of the codes of conduct for the managerial capability in the contexts of offensive patent litigation.