A Study on Patent Strategy of High-Tech Industry

In a knowledge economy, the value of firms derives from their intellectual property. As a result, technology-based patents constitute a sustainable competitive advantage in high-tech industries. Consequently, in a hyper competitive market, the patent strategy as a weapon for attacking or defending has become an imperative strategic thrust.
Patent strategy primarily encompasses decisions about obtaining patent rights, creating patent value, and enforcing them. Three strategies are pursued by firms in the patent domain – using patents as an isolating mechanism to shield valuable rent yielding commercial assets of the firms from imitation, leveraging of patents to maximize income or using patents as bargaining chips to strengthen the business’ position in dealing with third parties, and defending against patents owned by others to ensure freedom to innovate and operate in the marketplace. Thus decisions about patents can help firms build “positions” that become sources of dynamic capabilities in the long run.
This thesis adopts a qualitative research method. After in-depth interviews with three high-tech companies, the findings about their patent strategy are as follows. First, they all have a complete incentive mechanism to stimulate innovations. Second, as to non significant competitive technology, they seldom adopt disclosure system to prevent competitors from obtaining the patent. Third, they are still in lack of a comprehensive patent filing strategy to build picket fence of patents. Forth, they seldom use patents to raise company values and increase income. Fifth, they seldom accuse others of infringements, and have little edge when accused of. Sixth, only few of them acquire even the essential patents that set up the industry standard. Seventh, they seldom use the patent information well to avoid infringements as well of waste of resources, neither do they learn the technology for the trend of industry. Eighth, they still regard patent as the domain the legal department and yet have promoted the patent issue to the corporate strategy level. As such, patent strategy of these firms is still in the beginning stage. Last, they fail to take patents as a competitive weapon.
The research aims to provide high-tech industry with suggestions in formulating a patent strategy. With patent strategy model and processes, the thesis expects to raise the concerns of managers in the high-tech industry regarding the strategic importance of patents and the urgent need to formulate and implement a patent strategy.