Theoretical Perspectives on Patent Strategy Deepak Somaya Robert H. Smith School of Business University of Maryland College Park, MD 20742 Tel. 301 405 0333 Fax. 253 550 7736 Email: dsomaya@rhsmith.umd.edu DRAFT August 1, 2002 ABSTRACT We seek to advance scholarship in patent strategy by presenting a set of organizing theoretical perspectives to guide future research. The domain of patent strategy primarily encompasses patenting, licensing, and enforcement decisions. Patent strategy also entails a set of nested choices, where future opportunities are only available by building prior positions, which thus become a source of dynamic capabilities. Three generic strategies are pursued by firms in the patent domain – using patents to strategically “isolate” rent yielding organizational assets, maximizing royalty revenues from patented technologies, and defending against patents owned by others. In addition, patent strategy has an important organizational choice dimension, where the organizational modes used in the commercialization of complex multi-invention products have fundamental implications for the strategic use of patents by firms. I situate prior studies of patent use in the context of broad theoretical framework presented in this paper, and suggest avenues for further research into patent strategy. Keywords: patents, intellectual property, licensing, firm strategy JEL Classification: O3, K2, M2