Defensive patenting and portfolio synergies: the impact of patent invalidation on the renewal of citing patents

Abstract The literature on patent uses relies on surveys of patentholders to understand why they file patents. This article instead relies on the behaviour of patentholders to reveal why they file patents. This article investigates how court invalidations affect the decision to renew citing patents. A patent invalidation creates a shock for its holder but also its competitors who cite this patent: invalidation wipes out portfolio synergies and the necessity to hold defensive patents. This article uses regressions to estimate the factors that influence the renewal decision of second-generation patents and in particular whether the invalidation of a first-generation patent impacts the renewal decision of second-generation patents. This article finds that when the Federal Circuit invalidated a patent, the invalidation affected the renewal likelihood of second-generation patents that cite the invalidated patent. On the one hand, invalidations negatively affected the renewal decision of second-generation patents held in different portfolio that cited the invalidated first-generation patent. This observation supports that some patents are only renewed for defensive purposes prior to 2004. On the other hand, the portfolio size also affects the renewal decision of the second-generation patents. This observation supports the existence of portfolio synergies. But these two effects depend on the renewal anniversary.