Defensive and evasive ip strategies

Paper to be presented at the DRUID Academy 2013
on
DRUID Academy 2013
at Comwell Rebild Bakker, Rebild/Aalborg
Defensive and Evasive IP Strategies: An Exploratory Analysis among
Sectors
Annika Lorenz
Technische Universität Berlin
Chair of Innovation Economics
annika.lorenz@tu-berlin.de
Deepak Somaya
University of Illinois at Urbana-Champaign
College of Business
dsomaya@illinois.edu
Abstract
State-of-the-art:
A growing literature has begun to address the company strategies behind the acquisition and use of intellectual property
(IP), and scholars within this literature have sought to understand the linkages between IP as a strategic tool and its
impact on firm competitive advantage and performance (for a review see Somaya, 2012; Pisano, 2006). One commonly
understood strategic use of IP is to prevent the imitation of- or to isolate- the firm?s rent-yielding assets (Rumelt, 1984;
Mahoney & Pandian, 1992), which represents a proprietary IP strategy. By contrast, firms also often employ defensive
or evasive IP strategies that are designed to respond to IP that can be potentially acquired and enforced against them
by other firms and entities. The ultimate goals of a defensive IP strategy are to retain design and commercial freedom
(despite the IP held by others), and avoid being held up for exorbitant rents.
Theoretical arguments:
Prior research on companies? stated reasons for obtaining patents has noted a number of motivations that are
consistent with a defensive IP strategy, such as (defensive) blocking, building (defensive) thickets, avoiding litigation by
others, and use in negotiation and exchange (e.g., Blind et al., 2006; Blind et al., 2009; Cohen et al., 2000; Cohen et al.,
2002; Duguet & Kabla, 1998). Indeed, the idea that firms build patent portfolios or thickets to defend against litigation by
other patent owners is well understood (Hall & Ziedonis, 2001; Reitzig, 2004; Ziedonis, 2004), and it is also recognized
that such portfolios are often cross-licensed to avoid litigation (Grindley & Teece, 1997; Galasso, 2011; Galasso et al.,
2011).
Research gap and contribution:

However, research has remained largely focused on defensive patent portfolios or thickets, while a range of alternative
defensive strategies- such as inventing around IP, terminating R&D projects to avoid infringement, licensing-in rights,
opposing or revoking rights, and so on- remain underexplored. Additionally, we currently know very little about the
prevalence of different defensive and evasive strategies and their distribution across different types of industries and
firms. Thus, in this paper we investigate the prevalence and predictors of companies? usage of a range of different
defensive and evasive IP strategies. Rather than focus on a single defensive strategy- such as the building of deterrent
IP portfolios- we take a broad exploratory approach to contribute to our neglected understanding of a wide range of
defensive and evasive strategies.
Data and method:
The empirical setting of this study is based on 6,010 German manufacturing and services companies. The data we use
come from the 2008 German MIP (Mannheim Innovation Panel; ZEW) which represents the German Community
Innovation Survey (CIS). We exploratorily detect and interpret underlying structural relationships among the different
defensive and evasive strategies with the help of multiple correspondence analysis- a categorical data analysis
technique.
Results:
The empirics reveal interesting differences for manufacturing and non-manufacturing sectors as well as for subclasses
within the manufacturing sectors, which can be explained by differences in the underlying IP regime in each sector. In
general, we find that the two most common defensive strategies used by manufacturing firms are modification of
innovation projects and in-licensing whereas the two least common ones are stopping of R&D projects due to missing
access to property rights and cross-licensing. Evidently, the portfolio of defensive and evasive IP strategies used varies
by size such that smaller firms mainly rely on one or two strategies whereas bigger firms employ a larger defensive IP
strategy arsenal. We also find evidence for different combinations of defensive and evasive IP strategies among sector
and size classes.
Jelcodes:O34,O32

Defensive and Evasive IP Strategies – An Exploratory Approach Among Sectors
Annika Lorenz*
Technische Universität Berlin, Chair of Innovation Economics, VWS 2, Müller-Breslau-Straße 15,
D-10623 Berlin, Germany; phone: +49-30-314-76816; fax: +49-30-314-766 28.
Email: annika.lorenz@tu-berlin.de
Deepak Somaya
University of Illinois at Urbana-Champaign, 185 Wohlers Hall, 1206 South Sixth Street,
Champaign, IL, 61820, USA; phone: +1-217-333-6873.
Email: dsomaya@illinois.edu
*corresponding author
December 2012

Defensive and Evasive IP Strategies 2
Abstract
One commonly understood strategic use of intellectual property (IP) is to prevent the
imitation of the firm’s rent-yielding assets, which represents a proprietary IP strategy. By
contrast, firms also often employ defensive or evasive IP strategies that are designed to
respond to IP that can be potentially acquired and enforced against them by other firms and
entities. However, research has remained largely focused on defensive patent portfolios or
thickets, while a range of alternative defensive strategies – such as inventing around IP,
terminating R&D projects to avoid infringement, licensing-in rights, opposing or revoking
rights – remain underexplored. In this paper, we exploratorily investigate the prevalence and
predictors of companies’ usage of a range of different defensive and evasive IP strategies. The
empirical setting of this study is based on 2,995 innovative German manufacturing and
service companies. We apply multiple correspondence analysis – a categorical data analysis
technique – and find evidence for different combinations of defensive and evasive IP
strategies among sector and size classes. Our results have implications for policy and the
strategic management of IP.
Keywords: IP Strategy; Appropriation; Invent-around; Licensing; Modification; Out-of-court
Settlement; Patent Thicket; Multiple Correspondence Analysis

1 Introduction
A dramatic growth in patenting since the early 1980 (also known as patent surge) has raised
researchers’ awareness who argue that firms use patents strategically in technology
competition (Neuhäusler, 2012; Blind et al., 2009).
Therefore, a growing literature has begun to address the company strategies behind the
acquisition and use of intellectual property (IP), and scholars within this literature have sought
to understand the linkages between IP as a strategic tool and its impact on firm competitive
advantage and performance (for a review see Pisano, 2006; Somaya, 2012). One commonly
understood strategic use of IP is to prevent the imitation of – or to “isolate” – the firm’s rent-
yielding assets (Mahoney and Pandian, 1992; Rumelt, 1984), which represents a proprietary
IP strategy. By contrast, firms also often employ defensive or evasive IP strategies that are
designed to respond to IP that can be potentially acquired and enforced against them by other
firms and entities. The ultimate goals of a defensive IP strategy are to retain freedom to
operate and commercialize (despite the IP held by others), and avoid being held up for
exorbitant rents.
Prior research on companies’ stated reasons for obtaining patents has noted a number of
motivations that are consistent with a defensive IP strategy, such as (defensive) blocking,
building (defensive) thickets, avoiding litigation by others, and use in negotiation and
exchange (e.g., (Blind et al., 2009; Blind et al., 2006; Cohen et al., 2002; Cohen et al., 2000;
Duguet and Kabla, 1998). Indeed, the idea that firms build patent portfolios or thickets to
defend against litigation by other patent owners is well understood (Hall and Ziedonis, 2001;
Reitzig, 2004b; Ziedonis, 2004), and it is also recognized that such portfolios are often cross-
licensed to avoid litigation (Galasso, in press; Galasso et al., 2011; Grindley and Teece,
1997). However, research has remained largely focused on defensive patent portfolios or
thickets, while a range of alternative defensive strategies – such as inventing around IP,

terminating R&D projects to avoid infringement, licensing-in rights, opposing or revoking
rights, and so on – remain underexplored. Additionally, we currently know very little about
the prevalence of different defensive and evasive strategies and their distribution across
different types of industries and firms. Thus, in this paper we investigate the prevalence and
predictors of companies’ usage of a range of different defensive and evasive IP strategies.
Rather than focus on a single defensive strategy – such as the building of deterrent IP
portfolios – we take a broad exploratory approach to contribute to our neglected
understanding of a wide range of defensive and evasive strategies.
The empirical setting of this study is based on 2,995 innovative German manufacturing and
services companies. The data we use come from the 2008 German MIP (Mannheim
Innovation Panel; ZEW) which represents the German Community Innovation Survey (CIS).
We exploratorily detect and interpret underlying structural relationships among the different
defensive and evasive strategies with the help of multiple correspondence analysis – a
categorical data analysis technique. Categorical data are common results of survey research.
However, the analysis of such data often is hindered by the requirements and limitations of
many familiar research tools. CA is a versatile and easily implemented analytical method to
detect and interpret relationships among complex management phenomena.
The empirics reveal interesting differences for manufacturing and non-manufacturing sectors
as well as for subclasses within the manufacturing sectors, which can be explained by
differences in the underlying IP regime in each sector. In general, we find that the two most
common defensive strategies used by manufacturing firms are modification of innovation
projects and in-licensing whereas the two least common ones are stopping of R&D projects
due to missing access to property rights and cross-licensing. Evidently, the portfolio of
defensive IP strategies used varies by size such that smaller firms mainly rely on one or two
strategies whereas bigger firms employ a larger defensive IP strategy arsenal. We also find

evidence for different combinations of defensive and evasive IP strategies among sector and
size classes.
2 Literature Review
2.1 Appropriation and offensive IP strategies
Scholars have sought to understand why some firms profit from their innovations whilst
others do not. In 1986, David Teece developed a framework which since then has had a
lasting effect on research and practice. His ‘Profiting from Innovation (PFI)’ framework
predicts that the profits generated by a successful technological innovation tend to go to the
owners of either the underlying invention (depending on the underlying appropriability
regime1
) or to the owners of complementary technologies and/or assets (including other
components of the value chain) (Teece, 1986). A proprietary strategy refers to patents being
used as isolating mechanisms that protect the firm’s key competitive advantages from
imitation (Lippman and Rumelt, 2003; Rumelt, 1984). According to Teece (1986), in order to
appropriate returns from innovation firms first need to successfully complete an innovation
project or R&D process but afterwards also prevent imitation and copying of the firm’s
technological assets, ideas and knowhow (Mahoney and Pandian, 1992; Rumelt, 1984), i.e.
with the help of intellectual property rights and other strategies (Neuhäusler, 2012; Somaya,
2012). Therefore, companies themselves endogenously shape appropriability regimes by their
behaviors and strategies (Pisano, 2006).
At the same time, patent offices have witnessed an increase in patenting starting (also known
as patent surge) which can partly be explained by an increase in patent races. On the one
hand, firms seek to protect themselves from being blocked by competitors or on the other
1
Hereby, the appropriability regime refers to the protection instruments that span both legal mechanisms (e.g.,
patents, copyrights, and non-disclosure agreements) and “natural” barriers to imitation (e.g., degree of
difficulty in reverse engineering, and lead time advantage).

hand they seek to force or negotiate access to rivals’ technologies on better conditions (Cohen
et al., 2000; Hall and Ziedonis, 2001). And, firms especially in complex industries
increasingly started to patent their inventions.
Protection strategies should provide enough incentives to perform R&D and innovation
activities in the first place (Somaya et al., 2011). In general, protection strategies can be
divided into two groups of measures (e.g., Blind et al., 2006; Neuhäusler, 2012): Formal
appropriation instruments which grant inventors and innovators an exclusive right to exclude
others from the utilization of the protected subject matter (e.g., patents, trademarks, utility
patents or copyright) and strategic appropriation instruments that encompass various
measures on the part of companies to prevent spillovers of own innovation efforts and thus to
safeguard the appropriation of one's own innovation returns (e.g., . secrecy, complex design of
new products or services, lead time advantage).
In sum, all these instruments are examples of offensive IP strategies describing measures a
company actively undertakes to secure rents from R&D and innovation. Notwithstanding this
terminology, formal appropriation mechanisms can also be used strategically as a quality
signal to potential investors as well as to potential, R&D, alliance or licensing partners (Gans
et al., 2008; Gick, 2008; Somaya, 2012). Generally, most inventions represent minor advances
on the current state-of-the-art which implies that obtaining patent protection represents an
instance of firms appropriating value from their innovation through demonstrating and
describing originality and superiority of their invention (Reitzig and Puranam, 2009) and
mainly using the protection granted for strategic purposes afterwards.
Another stream of research focuses on strategic reasons to patenting which neither weakens
nor strengthens appropriability. Firms may use patents and other formal IP to exhibit strategic
commitment to a technological or research trajectory in order to drive competitors into exiting
R&D competition, patent races or terminating their R&D efforts (Gill, 2008; Somaya,

2012)or to prevent patenting by others and guarantee freedom of operation for the filing
company (Guellec et al., 2011). In this vein, firms increasingly use the patent system to create
their own freedom of design and operation. Scholars refer to this phenomenon as “defensive”
patenting where firms actively file for patents or acquire already granted patents to be able to
cross-license competitors, new entrants, and others. Moreover, this strategy provides the firm
with bargaining chips in case it (in)voluntarily infringes on other companies’ patents (Pisano,
2006; Pisano and Teece, 2007). Firms may also strategically employ formal appropriation
measures to discourage competitors from further investments in the same technology domain
(Agrawal and Garlappi, 2007; Baker and Mezzetti, 2005; Somaya, 2012). Therefore, firms
may strategically patent “poor” inventions to misguide competitors (Langinier, 2005).
A relatively new literature stream has begun to address the impacts of patents and patent
strategy on firms’ value creation through innovation (David and Hall, 2006), but it is still in
its infancy. Research reveals that firms prevent imitation not only by using patents or secrecy,
but by building on a full portfolio of protection mechanisms available to them and thus
securing or developing competitive advantages (Somaya, 2012). Surprisingly, Pisano and
Teece (2007) show that more IP protection and building stronger barriers around innovation
are not always the best path to appropriate value. (Brouwer and Kleinknecht, 1999) (also:
Arora, 1997; Levin et al., 1987) highlight that patenting is not the most important instrument
for appropriation of innovation benefits as companies rather rely on strategic means to capture
value from invention.

2.2 Determinants of IP appropriation strategies
Prior literature has intensely discussed firm characteristics such as firm size, R&D personnel,
sales, R&D intensity2
, sector or industry affiliation and a firm’s degree of internationalization
as determinants of different appropriation instruments (Cohen et al., 2000; Peeters and van
Pottelsberghe Potterie, 2006). Literature suggests that the reasons why firms patent changes
across industries and technologies (Cohen et al., 2000). Other ‘traditional’ determinants are
market power, market and technological opportunities, and R&D efforts related to firm and
sector characteristics. Especially firm size and market power relate to the well-known
Schumpeter hypotheses (Schumpeter, 1942). First, economies of scale and scope as well as a
greater resource endowment render large firms more competitive in comparison to their
smaller companies. Second, they do not only benefit from complementarities and spillovers
between different departments, employees and thus their knowhow; they also can hedge risks
by spreading their investments on several innovation projects. Third, they have easier access
to funding and financing opportunities for risky innovation projects. In a study conducted by
(Cohen et al., 2000), the authors demonstrate that the most important reason for firms not to
patent is the ease of legally inventing around a patent. Some firms also mention the costs for
filing a patent and defending it in court which signifies that smaller firms are definitely at a
disadvantage in patenting. Hence, large firms are better able to disseminate risks and costs of
litigation as well as the fixed costs of filing a patent over greater levels of output.
Scholars argue that large firms rely more on strategic appropriation mechanisms to secure
innovation rents (e.g., lead time), and hence are less likely to need patent protection.
2
Defined as the share of R&D personnel on total personnel Blind et al. (2006). Most studies that include an
R&D indicator in patent equations find a positive and significant relationship (e.g., Brouwer and Kleinknecht
(1999); Crépon et al. (1998); Duguet and Kabla (1998)).

However, they are better able to set up a patent department and have the resources available to
face lawsuits (Peeters and van Pottelsberghe Potterie, 2006).
In sum, there have been ambiguous results for firm size, sector and market opportunity
variables. When being controlled for other factors such as industry effects, differences in
access to external know-how, and appropriability conditions, firm size is no longer a
significant predictor for firms’ patenting behavior (Cassiman et al., 2002; Crépon et al., 1998;
Duguet and Kabla, 1998). Although firms in high-tech sectors are more likely to patent than
other firms (Brouwer and Kleinknecht, 1999; Crépon et al., 1998) there is not always a
significant difference (Duguet and Kabla, 1998). In general, market opportunity variables
have a positive and significant impact on patent applications, whilst some scholars do not find
a significant effect (Cassiman et al., 2002; Duguet and Kabla, 1998).
Additionally, the existence of a patent division and the threat by invent-around strategies have
been investigated (Neuhäusler, 2012). Somaya et al. (2007) show that the existence of in-
house patent departments increases patenting (performance). In a review Somaya (2012),
provides an overview of theoretical drivers of companies’ appropriation strategies. Using the
special case of patent protection, he emphasizes the importance of integrating protection
strategies into the company-level strategy. A study by Reitzig and Puranam (2009)
investigates organizational antecedents (e.g., formal structure or composition of the top
management team) of patent grant success.
Particularly, strong IP portfolios and aggressive IP protection strategies affect competitive as
well as cooperative structures (e.g., Blind and Thumm, 2004; Hertzfeld et al., 2006; Peeters
and van Pottelsberghe Potterie, 2006). However, in a micro-perspective the implementation of
IP appropriation strategies depends on the firm’s cooperative and competitive strategic
options and the competitive environment it operates in. With respect to the strategic
orientation of the firm, Blind and Thumm (2004) find that protection activities are determined

by technology protection motives and by strategic rationale reflected in a defensive strategy.
Firm specific strategic orientation strongly determines the composition and the value of the IP
portfolio (e.g. Blind et al., 2009; also: Anton and Yao, 2004). Peeters and van Pottelsberghe
Potterie (2006) show that firms’ engagement in formal IP protection is more intense when
innovation strategies are aligned with research intensive product innovation and low barriers
to innovation. Additionally, they find that broad collaboration activities, i.e., cooperative
innovation activities with science and industry, increase the intensity of formal IP protection.
Blind et al. (2006) seem to contrast this finding, as they cannot identify cooperative
innovation as a determinant of protection activities. Yet, these scholars find a strong effect of
intensive technologically motivated collaboration captured by their co-patenting variable.
With respect to effects of competition on the protection strategies of companies, the evidence
generally points towards a positive relationship. The more intense the competitive
environment the more intense the use of formal protection mechanisms (Blind et al., 2006;
Hall and Ziedonis, 2001; Peeters and van Pottelsberghe Potterie, 2006; Ziedonis, 2004).
Most studies discuss the above investigated patenting as the only formal means of protection;
traditionally, the use of other formal protection rights receives less attention. Nonetheless, the
factors influencing trademarks is firstly analyzed by Allegrezza and Guarda-Rauchs (1999).
The prosecution of copyright has not attracted a lot of empirical attention, because it is – in
general – not registered in databases, hence, data are not readily available.
2.3 Litigation and defensive IP strategies
A proprietary patent strategy seeks to prevent imitation of valuable rent-generating assets and
thus, creates or protects a competitive advantage position. On the other hand, firms sometimes
may need to have a viable strategy for defending against patents owned (and potentially

enforced) by others to guarantee that it is not put at a competitive disadvantage or at risk of
being held up for rents (Somaya, 2012).
The goal of this defensive strategy is to retain for the firm the freedom to operate and
commercialize their technologies without interference of other firms’ patents. Prior research
uses the term defensive patent strategy interchangeably in terms such as portfolio patenting,
(defensive) blocking and preemption, (defensive) thickets, validity challenges, and “strategic
patenting” (Somaya, 2012).
Particularly in dynamic high-technology sectors, patent races are common phenomena. Firms
often irreversibly invest in business opportunities in large scale before it is clear who will win
the race and secure the patents for the technologies at stake. In this paper, we focus on a range
of alternative defensive and evasive strategies – such as inventing around IP, terminating
R&D projects to avoid infringement, licensing-in rights, opposing or revoking rights, and so
on which remain underexplored.
Especially multi-invention contexts (e.g., ICT and semiconductor industries) when a large set
of technologies is required to commercialize products (Hall and Ziedonis, 2001; Somaya et
al., 2011), the exposure to others’ patents could hinder firms from using even their own
inventions if patents on other inventions required for commercialization include claims
against them. In turn, the owners of such patents can bargain for significant rents (e.g., by
generating licensing incomes, trading IP in cross-licensing agreements or negotiating access
to new technologies) and thus, hold up the alleged infringer with the threat of an injunction
(Hall and Ziedonis, 2001; Neuhäusler, 2012; Somaya, 2012).
A typical innovation process exposes firms to uncertainty regarding which patents will be
needed or who will own them and thus requires an ex post defensive strategy. Therefore,
firms often strategically build large defensive portfolios of their own patents to avoid one-
sided hold up situations and pose a valid counter threat with its own patents, leading to a

situation of mutual hold up. Nonetheless, a defensive strategy based on large patent portfolios,
cross-licensing, and mutual hold up has restrictions (Somaya, 2012).
Bargaining positions via licensing will be constrained if a patentee is not dependent on access
to the focal firm’s patents. In recent years, many companies face severe and heavy injunctions
and out-of-court settlements caused by specialized patent-holding firms so called patent
“trolls” (also “sharks” or non-practicing entities (NPEs)) that are invulnerable against
mutually held patents (Fischer and Henkel, 2012; Reitzig et al., 2010; Reitzig et al., 2007).
Moreover, in technology-intensive sectors (e.g., semiconductor industry), patents are often
licensed or cross-licensed and hence, the patent-protected technology is mutually exchanged
across a number of market players as it is an integral part of many different products.
However, this induces risks of litigation and thus, companies try to develop, search and hold
patents that their competitors also use to impose a valid counter threat (Hall and Ziedonis,
2001). Companies often use IP information strategically and lay a false trail of which
technological trajectory they are pursuing. After having misguided their competitors,
companies may cancel or adjust on-going R&D projects (Reitzig, 2004a). Nonetheless, this is
sometimes also done to avoid infringement and litigation. Moreover, companies can exert
defensive strategies, particularly litigation and out-of-court settlement, to raise market entry
barriers and thus impose a threat to potential new market entrants. Patent enforcement implies
considerable direct3
and indirect costs mainly attributable to the time and effort of manpower
involved (e.g., key managers, lawyers, engineers, and scientists of a firm) and disruption of
organizational routines. Furthermore, Lerner (1995) suggests that litigation led to a 2–3.1
percent average decline in the market value of the firms involved.
The frequency of legal disputes is strongly associated with a variety of characteristics of
innovations and their owners. Lanjouw and Schankerman (2004) find evidence that reputation
3
Direct legal costs alone can run in the range of $1.0–3.0 million (in 1997 dollars) for each side through trial
Somaya (2012).

building plays a significant role in the case of patent litigation especially when forward
citations to that patent can be attributed to firms active in closely related technology fields.
Hence, litigation risk is much higher for patents that are owned by individuals and firms with
small patent portfolios. Of course, for reputation building to be effective, the company must
impose a credible threat by conveying information to competitors about the willingness to
defend the patent. In addition, litigation suits can help build strategic positions (Teece et al.,
1997) that can confer advantages in future rounds of competition (Somaya, 2003). Moreover,
to secure a bargaining position, patentees are more likely to go to court to protect patents
particularly if they form the base of a cumulative chain or technological trajectory. Hence, a
firm’s ability to appropriate value from their subsequent, incremental inventions, either
through direct manufacturing or licensing, depends on their control over the initial invention
(Lanjouw and Schankerman, 2001).
In addition to these causes for litigation, Somaya (2004) suggests that irrational behaviors
(e.g., egos, poor legal advice, or the loss of perspective) as well as systematic strategic
explanations (e.g., ‘taking out a competitor’, reputation building, protecting its ‘crown
jewels,’ or extracting royalties) play an important role in litigation. Lerner (1995) emphasizes
another defensive strategy that has received less attention: the redirection of R&D and
innovation activities into technological areas where litigation is less likely.
2.4 Determinants of defensive and evasive IP strategies
Although a lot of research has focused on the determinants of formal measures and a new
stream of literature is increasingly dealing with the determinants for the choice of either
strategic or formal protection measures, the drivers for defensive strategies have not yet been
investigated. The reasons why firms use different defensive and evasive IP strategies may
vary across industries and technologies.

In general, the probability for patents to be litigated by a third party can vary by firm size.
Large firms tend to possess more resources, market power, financial capacity and experience
in patenting to enforce their rights than smaller firms (Neuhäusler, 2012). Large enterprises
induce a greater threat potential due to the mere the presence of a large patent portfolio which
in turn unlocks potential for cross-licensing negotiations or trade with other firms (Cohen et
al., 2000; Hall and Ziedonis, 2001). Prior research shows a greater likelihood of small firms to
be the target of patent litigation (Bessen and Meurer, 2005; Cremers, 2004; Ziedonis, 2003).
When looking at patent litigation, the chances for companies falling prey to litigation or
imitation are greater the more research-intensive a company is because these companies
usually generate more patents with substantial economic benefits (‘‘valuable patents’’)
(Allison et al., 2004; Harhoff et al., 2003; Neuhäusler, 2012). Additionally, research-intensive
companies also incur greater costs, since, relatively seen, they are more likely to enforce their
IP rights and litigate or oppose against imitation by third parties which requires more financial
resources. Another driving factor identified in prior literature is technological opportunity,
which is high when the cost of developing an invention is low e.g., in emerging sectors with a
low concentration of firms (Cohen and Klepper, 1992). Technological opportunity describes
another determinant for the usage of defensive and evasive strategy assuming that the more
technological opportunities exist, the greater a firm’s likelihood to exert defensive strategies.
The sector that a company operates similarly influences the decision to use defensive or
evasive strategies as does research intensity. In sectors where the cost of copying an
innovation is considerably less than the initial cost of invention, the value of patents is
greatest (Arundel and Kabla, 1998) which is true for research-intensive high-tech sectors.
According to Blind et al. (2009) (also: Cohen et al., 2002; Cohen et al., 2000), the differences
in patenting behavior between sectors and hence the differences in use of defensive strategies
mainly stem from the distinction between discrete and complex product industries.

Neuhäusler (2012) argues that in complex product industries, i.e. the electrical engineering
and automotive industry, the number of patents per market-exploitable innovation is
considerably larger than in discrete product industries, like the chemical sector. Particularly,
companies in complex industries use patents more often strategically (e.g., to force rivals into
negotiations), than companies in discrete industries which use patents to block rivals (Cohen
et al., 2000). Thus, firms operating in these sectors should be more prone to using defensive
or evasive strategies as they have to defend more IP. The degree to which a company’s
successfully uses invent-around or reverse-engineering strategies could also be influenced by
firm size and sector. Larger firms may exert reverse-engineering as they generally have more
resources at hand, their patent portfolio is larger and they more often employ a patent
department than smaller companies which they can fall back on when it comes to litigation. In
complex product industries, the existence of a larger patent thicket renders inventing-around
more difficult than in discrete product industries. Neuhäusler (2012) reasons that the
pharmaceutical sector marks an exception because patents on key molecules are also often
fenced by patent thickets.
Moreover, the degree of internationalization of a company can also influence its usage of
defensive or evasive IP strategies assuming that more international companies operate in more
markets and thus face more competition that creates more potential imitators as well as
licensees. Internationally operating firms are also bigger companies with a respectable
resource endowment which allows them to defend their per se bigger IPR portfolio. Previous
research has identified the increasing importance of patents in entering global markets
(Arundel and Kabla, 1998). Particularly, patents filed in exporting markets have a relevant
impact on exports which lead to higher profits. Thus, they serve as a value signal and attract
imitators. Furthermore, increased market competition is associated with more strategic
patenting which in turn relates to defensive and evasive strategies as the threat of being sued

rises (Neuhäusler, 2012). Another driving factor could be the existence of an in-house patent
department, mostly consisting of experienced patent attorneys and specialized R&D personnel
which reduces fixed costs for the patent application process, especially the costs for
information searches by using routines and scale effects (Hall and Ziedonis, 2001; Somaya et
al., 2007). The mere existence of a patent department is an indicator that a firm has developed
routine in enforcing patents and that it is able to identify and pursue infringers and thus, the
likelihood of litigation suits and revocation actions increases. Lanjouw and
Schankerman (2001) analyze determinants of patent litigation and focus on patent and patent
owner characteristics (e.g., domestic vs. foreign and corporate vs. individual). However, they
do not investigate relevant characteristics of companies involved in lawsuits. Firms having a
high frequency of cross-citations between their patents they are more likely to enter broad
cross-license agreements when their patent portfolios are complementary and when their
capital intensities are large enough. These cross-licenses are associated with fewer future law
suits between the firms (Galasso, in press). In a recent study, Galasso et al. (2011) find that
patent transactions (sales, licensing) negatively influence litigation.
2.5 Research question and contribution
Although a considerable body of literature investigates the use of offensive protection
mechanisms, Somaya (2012) argues on a general account that strategic and competitive
determinants of protection strategies are still not fully explored. Scholars have found a
positive relationship between both proprietary (Hall et al., 2005; Reitzig, 2004b) and
defensive (Reitzig, 2004b) patent strategies on firm market value (Somaya, 2012); however,
the drivers of companies’ use of defensive or evasive IP strategies remain to be studied. In
addition to Arora and Ceccagnoli (2006) and Arora (1997), who emphasizes the need to better
understand the interplay between different formal and strategic IP instruments available, we

analyze firms’ use of defensive and evasive IP strategies in their pursuit to appropriate rents
from innovation. This paper tries to shed some more light on the question which firm
characteristics exert an influence on the decision for or against a specific defensive or evasive
strategy. Additionally, we currently know very little about the prevalence of different
defensive and evasive strategies and their distribution across different types of industries and
firms. How can companies effectively exert defensive and evasive strategies to gain and
sustain a competitive advantage? Research has remained largely focused on defensive patent
portfolios or thickets, while a range of alternative defensive strategies – such as inventing
around IP, terminating R&D projects to avoid infringement, licensing-in rights, opposing or
revoking rights, and so on – remain underexplored. Thus, in this paper we investigate the
prevalence and predictors of companies’ usage of a range of different defensive and evasive
IP strategies by taking a broad exploratory approach to contribute to our neglected
understanding of a wide range of defensive and evasive strategies. In sum, we complement
the extant discussion on formal versus strategic appropriation instruments by analyzing
determinants of firms’ usage of defensive and evasive IP strategies as well as different
combinations of defensive and evasive IP strategies among sector and size classes.
3 Empirical analyses
3.1 Sample
We use data from the Mannheim Innovation Panel (MIP), ZEW, Mannheim, which is the
German version of the Eurostat Community Innovation Survey (CIS). Moreover, it includes
additional alternating questions. The MIP is sent out every year to a random sample (stratified
by size, region, and sector) of German companies. It addresses topics such as IP, innovation
performance, cooperation, etc. To address mortality, new companies (observations) are added
every other year. Among scholars (e.g., Belderbos et al., 2004; Cassiman and Veugelers,

2002; Leiponen and Helfat, 2011; Miotti and Sachwald, 2003; Tether, 2002), the interest in
CIS data has risen for two reasons. First, the data provide indicators for innovation
performance, and second, CIS data are used as a supplement to traditionally used patent data
(Kaiser, 2002; Leiponen and Helfat, 2011), thus downsides of patent data can be tackled. We
analyze data from the MIP 2008, containing information about defensive and evasive
strategies and about protection measures used by the companies in the sample. Furthermore,
we match patent and trademark stock data on a 1:1 basis using an ID variable unique to each
company throughout the MIP. The final data set contains 2,995 innovative companies and is
cross-sectional. In particular, the sample comprises 1,758 companies active in manufacturing
and 1,247 in service sectors. For firms to be included in the analysis they had to have selected
from the prescribed answers (“yes” or “no”) for all eight defensive and evasive strategies
outlined above; 2,995 (83.9%) of the 3,517 firms in the full sample did this and were retained
for further analysis. This high percentage suggests that most of the surveyed firms were
content that the prescribed answers reflected their defensive strategy orientations and
activities.
3.2 Measures
Variables
As major variables of interest, we employ eight different types of defensive sand evasive
strategies. The operationalization derives from the question “In the years from 2005-2007, did
your company encounter any incidents concerning access to IPR?” and results in the strategies
“Abandonment”, “Cancellation”, “Modification”, “Invent-around”, “In-licensing”, “Cross-
licensing”, “Revocation” and “Out-of-court settlement”. Hence, the variable for each strategy
is binary, 1 coding that a company has exercised a particular strategy, and 0 coding if it has
not employed a strategy. In our estimations, we also include variables which may influence

the likelihood of exercising defensive and evasive IP strategies. For firm size, we use the
number of employees in a company which reflects a categorical variable with a scale from 0
to 4. Firm size codes 0 for a company with less than ten employees and, hence, codes a small
company. A value of 4 represents a firm with more than 300 employees. By size, firms were
divided into five classes: with sampling divided across these five bands, with 12.3% <10
employees, 23.5% 11-30 employees, 23.9% 31-100 employees, 18.9% 100-300 employees,
and 21.2% >300 employees. Moreover, we investigate sectorial differences based on the
OECD sector classification 4
. Additionally, we differentiate between manufacturing and
service firms but also include various sector subclasses to gain a fine-grained picture of the
distribution of defensive and evasive IP strategies among them. We also account for firms’
usage of different formal appropriation mechanisms (patents, utility patents, design patents,
trademarks, and copyright) which we derived from the survey question “Which of the
following formal IPR mechanisms have been used in your company from 2005-2007?”. Both
sector and appropriation variables are binary and their coding resembles the one of the
defensive strategy variables. Furthermore, patent and trademarks stock (Patent Stock (ln);
Trademark Stock (ln)) variables are added. For an overview of all employed variables, please
refer to TABLE 1.
----------------------------------------------
Insert TABLE 1 about here.
----------------------------------------------
4
The information on sectors is provided by NACE codes and is translated into the OCED classification based
on Eurostat (2009).

Descriptives
The descriptive statistics in FIGURES 1-5 reveal interesting differences for manufacturing
and non-manufacturing sectors as well as for subclasses within the manufacturing sectors,
which can be explained by differences in the underlying IP regime in each sector. In general,
the majority of companies with more than 30 employees operates in manufacturing industries.
We find that the two most common defensive strategies used by manufacturing firms are
modification of innovation projects and in-licensing whereas the two least common ones are
stopping of R&D projects due to missing access to property rights and cross-licensing.
Moreover, for companies in non-manufacturing sectors the most pursued strategy is in-
licensing followed by modification of innovation projects; the least employed strategies are
abandonment and cancellation of innovation projects (see FIGURE 4). TABLE 2 shows some
more fine-grained picture and reveals that particularly the chemical and pharmaceutical, the
mechanical engineering and non-metallic goods manufacturing sectors are prone to apply
revocation and out-of-court settlement as defensive mechanisms. In-licensing is most often
used in chemical and pharmaceutical and electrical engineering industries whereas
modification is dominant among firms operating in electrical or mechanical engineering and
the manufacturing of non-metallic goods. With regards to services, in-licensing is the most
frequent strategy in information and communication as well as finance and insurance sectors.
FIGURE 1 shows that the portfolio of defensive IP strategies used varies by size such that
smaller firms mainly rely on one or two strategies whereas bigger firms employ a larger
defensive IP strategy arsenal. TABLES 3-5 show that there are different combinations of
defensive and evasive IP strategies among sector classes. In manufacturing, modification goes
most frequently together with in-licensing, revocation and out-of-court settlement. In service
sectors, modification of R&D projects is frequently pursued together with in-licensing and in-
licensing in turn appears together with out-of-court settlement, but at a much lower level than

in manufacturing industries. We also see that larger companies in absolute figures possess a
greater number of formal IP rights than smaller companies. Patents and trademarks are the
dominating formal protection measures in manufacturing sectors whereas firms operating in
service sectors seem to rely on trademarks and copyrights.
While the descriptive statistics already shed some light on the incidences of defensive and
evasive strategies across sectors and firm size, only the multivariate analyses can reveal
relationships between the variables. The results of these analyses are reported herein.
3.3 Statistical method
We were interested in whether underlying patterns exist in which defensive strategies are
pursued together by firms, and we therefore used multiple correspondence analysis, an
exploratory statistical technique equivalent to principal components analysis for categorical
data, to examine the data. Correspondence analysis (CA) has received considerable attention
in the statistical and psychometric literature under a variety of names, including dual scaling,
method of reciprocal averages, optimal scaling, canonical analysis of contingency tables,
categorical discriminant analysis, homogeneity analysis, quantification of qualitative data, and
simultaneous linear regression. Complete histories are given by (Greenacre, 1984; Leeuw,
1973), and (Nishisato, 1980). Though very few applications of CA have been reported in the
management literature, it has been frequently analyzed in marketing research (e.g., Carroll
and Green, 1988; Hoffman and Franke, 1986; Hoffman and Leeuw, 1992) and interest in
management research is increasing.
Usually, multidimensional scaling and unfolding, discriminant analysis, and principal
component analysis have been used to analyze and represent interrelationships between the
rows and/or columns of a data matrix. However, these methods have little applicability to the

categorical data that arise in many survey research applications because of the limitations and
constraints imposed on the data collection process.
The joint graphical display obtained from a correspondence analysis can help in detecting
structural relationships among the variable categories which permits rapid interpretation and
understanding of the data. Finally, CA has flexible data requirements. The only strict
requirement for conducting CA is a rectangular data matrix with non-negative entries
(Hoffman and Franke, 1986).
Moreover, multiple correspondence analysis (MCA) extends simple CA as it incorporates
more than two variables simultaneously. Basically, it is a simple CA executed on an indicator
matrix containing some measure of correspondence between cases (in our case firms) as rows
and categories of variables (in our case defensive and evasive strategies) as columns. Similar
to the identification of components in principal components analysis, or factors in factor
analysis, (multiple) correspondence analysis identifies and extracts a number of dimensions
which capture the deviations from the expected values (which would be zero if the variables
were statistically independent). The idea of this method is to estimate and maximize the
distances between the row or column points in the tables. Hence, the first few dimensions will
capture the greatest part of the overall deviation from statistical independence between the
variables whereas the following dimensions will less do so.
In general, (multiple) correspondence analysis is used for exploratory, inductive research
rather than hypothesis testing and deductive research (Le Roux and Rouanet, 2009; Tether
and Tajar, 2008). This exploratory approach generates scatter-plots with the scores of the
column variables plotted in the dimensions obtained from MCA. MCA disentangles variables
with a high degree of coherence which have similar scores in the analyzed dimensions and
hence lie close together. For interpretation, it is also important to note that points and groups
that are further away from the origin of the plots, are also stronger associated. Usually, MCA

produces as many scatter-plots as there are binary combinations of the dimensions.
Nonetheless, scholars mainly analyze and interpret the first two or three dimensions because
these capture the greatest deviance from statistical independence in the data (Le Roux and
Rouanet, 2009; Tether and Tajar, 2008).
3.4 Results
The multiple correspondence analysis for the full sample reveals 8 dimensions, each of which
accounts for between 34.6% and 5.9% of the total variation in the data (see TABLE 6). For
interpretation, we will focus on the first two dimensions, which individually account for the
largest amount of variation in the data, and together account for roughly 50% of the variance.
FIGURE 6 shows the plot of the defensive and evasive strategy variables for the full sample
included in the multiple correspondence analysis according to their scores in dimensions 1
and 2.
As explained earlier, where variables are closely grouped together, particularly if this is at
some distance from the origin, this shows variables with high levels of association. A clear
cluster of variables appears in the bottom left corner of FIGURE 6. This includes positive
answers that the firm has abandoned (Q8_2_a=1) or cancelled (Q8_2_b=1) an innovation
project due to missing access to property rights. A second cluster of variables is found slightly
to the left along the horizontal axis. This group of variables consists of all other strategies
(Modification, Invent-around, In-licensing, Revocation and Out-of-court settlement) except
for cross-licensing (Q8_2_f=1) which appears to be a single point in the upper left corner of
the plot suggesting that it either is a strategy that is less frequently employed or radically
different from all other defensive and evasive strategies. The plot also shows another cluster
of variables, located close to the center of the plot. This is comprised of the corresponding
negative variables (“no” answers) for all defensive and evasive strategies and hence identifies

the variables of the strategies that firms do not employ. We conducted the same analysis by
comparing both manufacturing and service sectors. FIGURE 7 reveals some interesting
differences. For manufacturing, we identify four clusters of variables similar to the ones
revealed in the full sample suggesting that the manufacturing sector seems to be a better
representation of the full sample than the service sector. As the descriptives have already
shown, most larger companies and firms operating in the manufacturing sectors also have a
greater arsenal of defensive strategies they employ which may explain the stronger
association of the variables for this sector affiliation. Another reason might be due to the fact
that the service sector is very diverse and comprises small sector subclasses. For the service
sector, the picture is less clear. The variables “Abandonment” and “Cancellation” group
together in the lower left corner. Another cluster consists of “Modification” (Q8_2_c=1) and
“Invent-around” (Q8_2_d=1) and a third group comprises of the strategies “Revocation”
(Q8_2_g=1) and “Out-of-court settlement” (Q8_2_i=1). In the service sector, “In-licensing”
(Q8_2_e=1) and “Cross-Licensing” (Q8_2_f=1) reflect separate strategies. For a more precise
overview, FIGURE 8 shows different associations of defensive and evasive strategies based
on two especially selected sectors (Chemicals and Pharmaceuticals as well as Information and
Communication sectors). For Chemicals and Pharmaceuticals, we find five different clusters
of defensive strategies. Cluster one comprises of the strategy “Cancellation” in the bottom of
the plot, cluster two of the strategies “Abandonment”, “Modification” and “Invent-around”,
cluster three “In-licensing”, “Revocation” and “Out-of-court settlement”. In the top left corner
of the plot, we find “Cross-licensing” reflecting another cluster with a single strategy. In
contrast, the graphical representation for the Information and Communication sector shows a
different pattern of six defensive strategy combinations. Cluster one represents the strategies
“Abandonment” and “Cancellation”, in another cluster at the top of the plot the strategies
“Cross-licensing”, “Revocation” and “Out-of-court settlement” appear together. However, the

strategies “In-licensing”, “Modification” and “Invent-around” seem to reflect separate
strategies in this sector. All these differences among the sectors may be due to the underlying
IP regime in each sector.
In sum, the results suggest that there is evidence for different combinations of defensive and
evasive IP strategies among sector classes. A drawback of the method relates to the ratio
distortion of the maps; the scales on the vertical axes are usually different from that on the
horizontal axes (Tether and Tajar, 2008).
4 Discussion and implications
In addition to Arora and Ceccagnoli (2006) and Arora (1997), this study examines the
interplay between different defensive and evasive IP instruments available to firms in their
quest to appropriate rents from innovation. From a theoretical perspective, this paper sheds
some light on the prevalence of different defensive and evasive strategies and their
distribution across different types of industries and firms. With a broad exploratory approach,
we are able to identify different combinations of defensive and evasive IP strategies among
sector and size classes.
A crucial feature of our data is that the unit of observation is at company level - not at product
level. This might be important when analyzing defensive and evasive IP strategies as these
often refer to specific products or components of technologies rather than entire product
portfolios. Nonetheless, we assume a certain extent of homogeneity of in the firms’ product
portfolio.
In this paper, we use MCA to disentangle associations of companies’ use of specific defensive
appropriation strategies. Correspondence analysis (CA) has a long research tradition as a
technique for exploratory data analysis with a few exceptions; management scholars have not
reported many applications of its use. Moreover, CA has received little attention in the

management literature (Carroll and Green, 1988). Researchers often need to detect and
interpret underlying relationships among variables. The purpose of our article is to increase
awareness of the business research community for a multivariate descriptive statistical method
that represents graphically the rows and columns of a categorical data matrix.
MCA does have limitations. It is a multivariate descriptive statistical method and is not
suitable for testing hypotheses. Finally, it must be recognized that in many ways MCA is a
subjective technique. Often it is possible to obtain many different representations of a data set,
resulting in different analysis categories and solutions. Nonetheless, MCA offers great
flexibility which can initiate more insight in the underlying relationships of the variables
studied due to these different portrayal options. Hence, flexibility comes at the cost of
subjectivity of the analysis (Hoffman and Franke, 1986).
Prior research suggests that management of these new options of defensive and evasive IP
strategies remains unclear. In this paper, we contribute to resolve this issue by linking firm
determinants to defensive and evasive IP instruments. By doing so, we hope that managers
gain a better understanding of the general relevance and hence the impact of exercising these
different strategies. Thus, we expect managers to develop better knowledge and expertise of
when and how the use of either defensive or evasive strategy is an appropriate measure to
capture value from an innovation. Moreover, firms and their managers should be aware of the
prevalent defensive and evasive strategies employed in the sectors they are operating in.
Especially smaller firms- that usually apply less of these strategies- can benefit from this
analysis here. Small companies should be aware of the whole portfolio of different defensive
mechanisms so that they know how to cope with them in case they encounter similar
situations. Managers should reconsider the costs of some of the strategies presented in this
paper as there are other defensive mechanisms which might be less costly. On the other hand,
a company enforcing its rights in court or with revocation may set an example and thus, pose

a credible threat with regards to potential future IP disputes. This paper further shows that
firms may not only file patents for proprietary reasons but rather to be strategically well
positioned in case of counter-sues and in terms of competition. Thus, companies more often
use patents as a strategic weapon in the competitive arena. Recent figures provided by the
United States Patent and Trademark Office (USPTO) seem to support this assumption: The
number of patent applications has roughly quadrupled between 1983-2010. By contrast,
neither innovation nor R&D expenditures have exhibited any particular upwards trend, not to
speak of factor productivity. While patent litigation has increased, few patents are actively
used (Boldrin and Levine, 2012). The same is true for the European Patent Office (EPO)
which has seen a patent application upsurge since the 1990s (Blind et al., 2006). Discouraged
by a growing fear of lawsuits, firms are increasingly afraid to invest in expensive research
projects. Especially small companies, which only own few patents, increasingly invest more
carefully as they cannot a priori assess whose patents they infringe upon (Schwiebacher,
2012).
In sum, companies having had experience with infringement situations might have developed
their arsenal of defensive and evasive strategies based on these prior experiences and hence, a
successful invent-around experience may induce the use of this strategy again.
Our analysis provides two main insights. First, innovating companies must early on assess the
benefits and drawbacks of the different organizational IP strategies, and then decide for the
most effective defensive or evasive strategy for the given context. Second, the innovating
company must decide on strategies that are well aligned with its general corporate strategies
and goals as companies can lose credibility when exercising defensive or evasive IP
strategies. In sum, we emphasize the importance of a valid defensive strategy at hand and as
an essential part of the firm's business strategy and not just an ‘afterthought’ (Somaya et al.,
2011). The technological and research trajectories of a company have to be well aligned with

its usage of defensive and evasive strategies. Hence, IP becomes a strategic weapon in the
corporate arsenal (Reitzig, 2004a).
For policy-makers, this study delivers some interesting aspects of defensive strategies with
regards to frequency and increasing importance across all sectors but particularly in the
manufacturing industries. Companies seem to feel the urge to exercise these types of
strategies due to a non-transparent patent system which is also known as “patent thicket”.
Oftentimes firms face severe difficulties in gathering all necessary information on already
existing patents. Particularly, in some industries (e.g., information and communication
technologies or semiconductors), it is difficult to develop innovations or new products
without infringing on other companies’ rights. This leaves room for improvement of the
patent system which needs to become more coherent and accessible. Additionally, the above
mentioned weaknesses raise another voice for a more efficient patent system especially
against the background of the new European patent announced to be introduced in 2014.
5 Conclusion and further research
Defensive strategies have increasingly raised awareness as they seem to become companies’
strategic weapon in an ever faster moving, complex business environment with growing
competition and shortening of product-life cycles. We exploratorily detect and interpret
underlying structural relationships among the different defensive and evasive strategies with
the help of multiple correspondence analysis – a categorical data analysis technique. The
empirics reveal interesting differences for manufacturing and non-manufacturing sectors as
well as for subclasses within the manufacturing sectors, which can be explained by
differences in the underlying IP regime in each sector. Evidently, the portfolio of defensive IP
strategies used varies by size such that smaller firms mainly rely on one or two strategies
whereas bigger firms employ a larger defensive IP strategy arsenal. We also find evidence for

different combinations of defensive and evasive IP strategies among sector and size classes.
Due to the limitations of the statistical method we employ, we are not able to detect any
causal relationships. However, in a further paper we are focusing particularly on the drivers
and determinants of companies’ use of defensive and evasive IP strategies.
From a theoretical perspective, this paper emphasizes the importance for managers to
understand the importance of defensive and evasive IP strategies as crucial for value
appropriation from innovation.
According to Reitzig (2004a), firms should govern and exploit their IP assets more effectively
and integrate their defensive IP strategy into a cohesive corporate strategy (Somaya et al.,
2011). The results of this study have implications for policy. Companies’ use of defensive and
evasive strategies reveals weaknesses and inefficiencies which call for a reform of the patent
system.
Acknowledgements
The authors thank the ZEW Mannheim and Prof. Knut Blind for sharing the data. The usual
disclaimer applies.

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Appendix
TABLE 1. Summary statistics (N=2,995)
Variable Mean Std. Dev. Min. Max.
Defensive strategies
Abandonment 0.038 0.192 0 1
Cancellation 0.028 0.164 0 1
Modification 0.171 0.376 0 1
Invent-around 0.102 0.303 0 1
In-licensing 0.188 0.391 0 1
Cross-licensing 0.033 0.180 0 1
Revocation 0.121 0.326 0 1
Out-of-court settlement 0.129 0.335 0 1
Formal protection mechanisms
Patents 0.373 0.484 0 1
Utility Patents 0.297 0.457 0 1
Design Patents 0.110 0.313 0 1
Trademarks 0.396 0.489 0 1
Copyrights 0.201 0.401 0 1
OECD sectors
High-tech 0.046 0.210 0 1
Medium high-tech 0.183 0.386 0 1
Medium low-tech 0.194 0.396 0 1
Low-tech 0.124 0.330 0 1
Knowledge-intensive services 0.354 0.478 0 1
Less-knowledge-intensive services 0.013 0.112 0 1
NACE sectors
Manufacturing 0.584 0.493 0 1
Chemicals and pharmaceuticals 0.055 0.228 0 1
Plastics and rubber 0.037 0.188 0 1
Manufacturing of non-metallic mineral products 0.025 0.157 0 1
Manufacturing of food, beverages and tobacco 0.033 0.180 0 1
Metal processing 0.081 0.273 0 1
Electrical engineering 0.109 0.311 0 1
Mechanical engineering 0.127 0.333 0 1
Manufacturing of textiles, clothes and leather 0.030 0.170 0 1
Manufacturing of wood, paper and furniture 0.045 0.208 0 1
Printing and reproduction of recorded media 0.019 0.138 0 1
Other manufacturing 0.102 0.302 0 1
Services 0.416 0.493 0 1
Information and communication 0.077 0.268 0 1
Professional scientific and technical activities 0.112 0.315 0 1
Financial and insurance activities 0.047 0.213 0 1
Other services 0.145 0.352 0 1
Size
Employees 2.133 1.323 0 4

TABLE 2. Incidences of defensive and evasive strategies across manufacturing sectors
Sectors
Abandon-
ment
Cancel-
lation
Modi-
fication
Invent-
around
In-
licensing
Cross-
licensing
Revo-
cation
Out-of-
court
settlement
Chemicals and
pharmaceuticals 10% 7% 27% 15% 32% 4% 21% 24%
Plastics and
rubber 6% 4% 19% 15% 10% 7% 22% 17%
Manufacturing of
non-metallic
mineral products 11% 9% 33% 14% 21% 4% 30% 24%
Manufacturing of
food, beverages
and tobacco 3% 2% 12% 8% 15% 2% 16% 13%
Metal processing 4% 3% 17% 13% 14% 3% 12% 14%
Electrical
engineering 6% 4% 30% 16% 24% 6% 17% 19%
Mechanical
engineering 4% 2% 30% 15% 20% 7% 23% 21%
Manufacturing of
textiles, clothes
and leather 3% 0% 16% 9% 17% 2% 17% 13%
Manufacturing of
wood, paper and
furniture 3% 3% 8% 6% 17% 1% 4% 10%
Printing and
reproduction of
recorded media 2% 2% 7% 7% 5% 2% 3% 3%
Other
manufacturing 4% 3% 22% 13% 19% 1% 12% 13%
Information and
communication 3% 3% 13% 9% 29% 3% 7% 10%
Professional
scientific and
technical
activities 3% 3% 15% 8% 15% 1% 6% 5%
Financial and
insurance
activities 0% 1% 6% 2% 27% 1% 1% 8%
Other services 1% 1% 4% 4% 13% 1% 5% 6%

TABLE 3. Frequencies of strategies appearing together – full sample (N=2,995)
Abandonment Cancellation Modification Invent-
around
In-licensing Cross-licensing Revocation Out-of-court
settlement
Abandonment 115
Cancellation 49 83
Modification 82 63 511
Invent-around 38 27 146 305
In-licensing 56 37 209 98 563
Cross-licensing 20 11 72 32 69 100
Revocation 55 37 214 95 166 71 362
Out-of-court
settlement
54 36 209 106 188 73 216 385
TABLE 4. Frequencies of strategies appearing together – manufacturing (N=1,748)
around
settlement
Abandonment 91
Cancellation 37 59
In-licensing 42 28 162 76 337
Revocation 49 28 187 81 137 62 299
Out-of-court
settlement
46 29 177 88 145 61 184 301

TABLE 5. Frequencies of strategies appearing together – services (N=1,247)
around
settlement
Abandonment 24
Cancellation 12 24
In-licensing 14 9 47 22 226
Revocation 6 9 27 14 29 9 63
Out-of-court
settlement
8 7 32 18 43 12 32 84
TABLE 6. Revealed dimensions from multiple correspondence analysis (N=2,995)
Principal inertia Percent Cumulative percent
Dimension 1 0.346 34,6% 34,58%
Dimension 2 0.154 15,4% 49,95%
Dimension 3 0.114 11,4% 61,35%
Dimension 4 0.098 9,8% 71,20%
Dimension 5 0.090 9,0% 80,20%
Dimension 6 0.075 7,5% 87,70%
Dimension 7 0.064 6,4% 94,10%
Dimension 8 0.059 5,9% 100,00%

C
0
50
100
150
200
250
<10 11-30 31-100 101-300 >300
Abandonment
Cancellation
Modification
Invent-around
In-licensing
Cross-licensing
Revocation
Out-of-court settlement
FIGURE 1. Incidences of defensive and evasive strategies over firm size
FIGURE 2. Incidences of formal protection mechanisms over firm size
FIGURE 3. Number of observations by firm size and industry affiliation
0
50
100
150
200
250
300
350
400
<10 11-30 31-100 101-300 >300
Patents
Utility models
Design patents
Trademarks
Copyrights

FIGURE 4. Incidences of defensive and evasive strategies over industry affiliation
FIGURE 5. Number of observations by formal protection instruments and industry

FIGURE 6. Identifying associations of defensive and evasive strategies in the full sample
FIGURE 7. Identifying associations of defensive and evasive strategies – manufacturing
and service sectors

FIGURE 8. Identifying associations of defensive and evasive strategies – chemical and
pharmaceutical and information and communication sectors

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