Working Paper | HBS Working Paper Series | 2013

The Impact of Patent Wars on Firm Strategy: Evidence from the Global Smartphone Market

by Yongwook Paik and Feng Zhu

Abstract

We examine how patent wars affect firm strategy. We hypothesize that, as patent wars intensify, firms shift their business foci to markets with weak intellectual property (IP) protection due to increased litigation risks. This shift is attenuated for firms with stronger technological capabilities and is more pronounced for firms whose home markets have weak IP systems. Using data from the global smartphone market, we find support for these hypotheses. Interestingly, we also find that the patent war intended to hamper the growth of the Android platform may have merely shifted the sales to weak IP countries. This study sheds light on the emerging patent enforcement strategy literature by highlighting the heterogeneity in the efficacy of national patent systems in explaining firm strategy in platform-based markets.

Keywords: patent litigation; intellectual property; platform-based markets; smartphone; institutional heterogeneity; Technology Platform; Patents; Lawsuits and Litigation; Globalized Markets and Industries; Business Strategy; Telecommunications Industry;

Citation:

Paik, Yongwook, and Feng Zhu. "The Impact of Patent Wars on Firm Strategy: Evidence from the Global Smartphone Market." Harvard Business School Working Paper, No. 14-015, August 2013.