Why do large firms disclose patentable inventions defensively? We study IBM's disclosure and patenting activity and find that stronger antitrust enforcement and consent decrees limiting patent protection lead to more defensive disclosure. We extend our analysis to Xerox and show, using a differences-in-differences approach, a decline in patent propensity and an increase in patent scope in patent classes affected by the 1975 consent decree. We extend our analysis to include AT&T, the other exceptionally large firm with defensive-disclosure activity, and show that their patenting propensity declined under increased antitrust enforcement relative to other firms in the industry. Overall, we show how these firms used defensive disclosure as a strategy to balance the benefits of patenting with the costs of uncertain antitrust enforcement. Our results are especially relevant in light of the defensive patent strategies many firms employ to preempt and cope with patent litigation.

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doi.org/10.1080/13662716.2014.987452, hdl.handle.net/1765/84135
ERIM Top-Core Articles
Industry and Innovation
Department of Applied Economics

Bhaskarabhatla, A., & Pennings, E. (2014). Defensive Disclosure of Patentable Inventions under Antitrust Enforcement. Industry and Innovation, 21(7-8), 533–552. doi:10.1080/13662716.2014.987452