The effects of foreign patent litigation on firms’ patent strategies: evidence from Chinese litigants in the US court

Abstract

ABSTRACT The internationally orientated market leads to a surge of cross-border patent litigations. Despite the growing literature on patent litigations, research on the impact of patent litigation on firms’ patent strategy is sparse, especially on the impact of foreign patent litigations. Using US patent infringement lawsuits in which Chinese public firms act as defendants, this paper investigates the effect of foreign patent litigation on firms’ subsequent patent outputs and patent trajectories. We find that the experience of foreign patent litigation increases the accused firms’ subsequent patent filings, and those firms tend to apply exploitative patents instead of exploratory patents. We further find that such promoting impact is more pronounced for firms with a high level of international intensity and firms in the ICT industry. These findings highlight the role of foreign patent litigation in future patent creation, thus enriching the literature on patent litigation and international business. According to the results, firms should take foreign patent litigation as an opportunity to build a strong patent portfolio and improve patent strategies.