Software Piracy and IP Management Practices: Strategic Responses to Product-Market Imitation

48 Pages Posted: 28 Aug 2021 Last revised: 19 Oct 2021

See all articles by Wendy A. Bradley

Wendy A. Bradley

Southern Methodist University (SMU) - Strategy & Entrepreneurship Department

Julian Kolev

United States Patent and Trademark Office

Date Written: August 2021

Abstract

How do firms’ IP strategies respond to sudden increases in product-market imitation? Using a 2001 technological shock that enabled rising software piracy, we implement an instrumental-variables estimator to compare a treatment group of at-risk-of-piracy firms with matched not-at-risk control firms. We find that rising piracy increases subsequent R&D spending, copyrights, trademarks, and patents for large, incumbent software firms. Furthermore, copyright and trademark filings precede those of patents, and firms with large patent portfolios disproportionately increase copyrights and trademarks following the shock. We conclude that piracy and similar competitive shocks push firms to innovate to stay ahead of imitator products, and that this effect is moderated by their existing patent portfolios. Our findings have implications for managers seeking to capture value from IP in knowledge-based industries.

Keywords: piracy, software, innovation, intellectual property

JEL Classification: O32, O34, D22, M21, L86

Suggested Citation

Bradley, Wendy and Kolev, Julian, Software Piracy and IP Management Practices: Strategic Responses to Product-Market Imitation (August 2021). USPTO Economic Working Paper No. 2021-3, Available at SSRN: https://ssrn.com/abstract=3912074 or http://dx.doi.org/10.2139/ssrn.3912074

Wendy Bradley

Southern Methodist University (SMU) - Strategy & Entrepreneurship Department ( email )

6212 Bishop Blvd.
Dallas, TX 75205
United States

HOME PAGE: http://https://www.smu.edu/cox/Our-People-and-Community/Faculty/Wendy-Bradley

Julian Kolev (Contact Author)

United States Patent and Trademark Office ( email )

Alexandria
VA 22313-1451
United States

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