{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,4,4]],"date-time":"2026-04-04T05:43:12Z","timestamp":1775281392828,"version":"3.50.1"},"reference-count":61,"publisher":"Institute for Operations Research and the Management Sciences (INFORMS)","issue":"2","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Management Science"],"published-print":{"date-parts":[[2025,2]]},"abstract":"<jats:p> We study the blocking effect of patents on follow-on innovation by others. We posit that follow-on innovation requires freedom to operate (FTO), which firms typically obtain through a license from the patentee holding the original innovation. Where licensing fails, follow-on innovation is blocked unless firms gain FTO through patent invalidation. Using large-scale data from post-grant oppositions at the European Patent Office, we find that patent invalidation increases follow-on innovation, measured in citations, by 16% on average. This effect exhibits a U-shape in the value of the original innovation. For patents on low-value original innovations, invalidation predominantly increases low-value follow-on innovation outside the patentee\u2019s product market. Here, transaction costs likely exceed the joint surplus of licensing, causing licensing failure. In contrast, for patents on high-value original innovations, invalidation mainly increases high-value follow-on innovation in the patentee\u2019s product market. We attribute this latter result to rent dissipation, which renders patentees unwilling to license out valuable technologies to (potential) competitors. <\/jats:p><jats:p> This paper was accepted by Ashish Arora, entrepreneurship and innovation. <\/jats:p><jats:p> Funding: This work was supported by the Deutsche Forschungsgemeinschaft [Collaborative Research Center TRR 190]. F. Gaessler acknowledges financial support from the Spanish Agencia Estatal de Investigaci\u00f3n through the Severo Ochoa Programme for Centres of Excellence in R&amp;D [Barcelona School of Economics CEX2019-000915-S]. <\/jats:p><jats:p> Supplemental Material: The online appendices and data files are available at https:\/\/doi.org\/10.1287\/mnsc.2019.02294 . <\/jats:p>","DOI":"10.1287\/mnsc.2019.02294","type":"journal-article","created":{"date-parts":[[2024,5,8]],"date-time":"2024-05-08T17:18:47Z","timestamp":1715188727000},"page":"1315-1334","source":"Crossref","is-referenced-by-count":8,"title":["Patents, Freedom to Operate, and Follow-on Innovation: Evidence from Post-Grant Opposition"],"prefix":"10.1287","volume":"71","author":[{"ORCID":"https:\/\/orcid.org\/0000-0001-6178-4097","authenticated-orcid":false,"given":"Fabian","family":"Gaessler","sequence":"first","affiliation":[{"name":"Department of Economics and Business, Universitat Pompeu Fabra, 08002 Barcelona, Spain; and UPF Barcelona School of Management, 08008 Barcelona, Spain; and Barcelona School of Economics, 08005 Barcelona, Spain; and Max Planck Institute for Innovation and Competition, 80539 Munich, Germany"}]},{"ORCID":"https:\/\/orcid.org\/0000-0001-7708-292X","authenticated-orcid":false,"given":"Dietmar","family":"Harhoff","sequence":"additional","affiliation":[{"name":"Max Planck Institute for Innovation and Competition, 80539 Munich, Germany; and Munich School of Management, Ludwig-Maximilians-University, 80539 Munich, Germany; and Centre for Economic Policy Research (CEPR), London EC1V 0DX, United Kingdom"}]},{"given":"Stefan","family":"Sorg","sequence":"additional","affiliation":[{"name":"Max Planck Institute for Innovation and Competition, 80539 Munich, Germany"}]},{"ORCID":"https:\/\/orcid.org\/0000-0003-3935-1679","authenticated-orcid":false,"given":"Georg","family":"von Graevenitz","sequence":"additional","affiliation":[{"name":"School of Business and Management, Queen Mary University of London, London E1 4NS, United Kingdom"}]}],"member":"109","reference":[{"key":"B1","doi-asserted-by":"publisher","DOI":"10.1002\/smj.2261"},{"key":"B2","first-page":"987","volume":"18","author":"Allison JR","year":"2003","journal-title":"Berkeley Tech. Law J."},{"key":"B3","doi-asserted-by":"publisher","DOI":"10.1016\/j.ijindorg.2019.102534"},{"key":"B4","doi-asserted-by":"publisher","DOI":"10.1080\/10438599500000013"},{"key":"B5","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1050.0437"},{"key":"B6","doi-asserted-by":"publisher","DOI":"10.1016\/S0167-2681(03)00002-7"},{"key":"B7","doi-asserted-by":"publisher","DOI":"10.1016\/S0169-7218(10)01015-4"},{"key":"B8","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2022.104650"},{"issue":"2","key":"B10","first-page":"401","volume":"45","author":"Bessen J","year":"2013","journal-title":"Loyola University Chicago Law J."},{"key":"B11","doi-asserted-by":"publisher","DOI":"10.1007\/1-4020-2755-9_29"},{"key":"B12","first-page":"281","volume-title":"Handbook of Industrial Organization","volume":"5","author":"Bryan KA","year":"2021"},{"key":"B13","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2023.104785"},{"key":"B14","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2019.103828"},{"key":"B16","first-page":"2809","volume":"61","author":"Cotropia CA","year":"2020","journal-title":"Boston College Law Rev."},{"key":"B17","doi-asserted-by":"publisher","DOI":"10.1016\/j.jebo.2016.08.005"},{"key":"B18","doi-asserted-by":"publisher","DOI":"10.1007\/s10657-016-9529-0"},{"key":"B19","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2008.07.011"},{"key":"B20","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.2022.4574"},{"key":"B21","first-page":"29","volume":"57","author":"Doyle NJ","year":"2016","journal-title":"IDEA"},{"issue":"613","key":"B22","first-page":"1983","volume":"128","author":"Falk A","year":"2018","journal-title":"Econom. J. (London)"},{"key":"B23","doi-asserted-by":"publisher","DOI":"10.1002\/smj.562"},{"key":"B24","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2023.104854"},{"key":"B26","first-page":"358","volume-title":"Standing on the Shoulders of Scotchmer: The Empirical Economics of Cumulative Innovation","author":"Furman JL","year":"2017"},{"key":"B27","doi-asserted-by":"publisher","DOI":"10.1093\/qje\/qju029"},{"key":"B28","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2012.08.002"},{"key":"B29","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2007.07.006"},{"key":"B30","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1070.0814"},{"key":"B31","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2014.07.002"},{"key":"B32","doi-asserted-by":"publisher","DOI":"10.2307\/2556033"},{"key":"B33","doi-asserted-by":"publisher","DOI":"10.1080\/10438599.2010.536378"},{"key":"B34","doi-asserted-by":"publisher","DOI":"10.1257\/aer.p20161093"},{"key":"B35","doi-asserted-by":"publisher","DOI":"10.1016\/j.ijindorg.2004.01.001"},{"key":"B36","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.2015.2152"},{"key":"B37","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2021.104215"},{"key":"B38","doi-asserted-by":"publisher","DOI":"10.1086\/466903"},{"key":"B39","doi-asserted-by":"publisher","DOI":"10.1016\/j.jeconom.2005.02.011"},{"key":"B40","doi-asserted-by":"publisher","DOI":"10.1093\/qje\/qjw040"},{"key":"B41","doi-asserted-by":"publisher","DOI":"10.1080\/13571516.2018.1553284"},{"key":"B42","doi-asserted-by":"publisher","DOI":"10.1016\/j.jeconbus.2020.105906"},{"key":"B43","doi-asserted-by":"publisher","DOI":"10.1086\/380476"},{"key":"B44","doi-asserted-by":"publisher","DOI":"10.1257\/0895330054048650"},{"key":"B45","doi-asserted-by":"publisher","DOI":"10.1002\/smj.1950"},{"key":"B46","doi-asserted-by":"publisher","DOI":"10.2307\/2555833"},{"key":"B47","doi-asserted-by":"publisher","DOI":"10.1007\/s10657-011-9221-3"},{"key":"B48","doi-asserted-by":"publisher","DOI":"10.1016\/0167-2681(94)90083-3"},{"key":"B49","doi-asserted-by":"publisher","DOI":"10.1287\/orsc.2019.1337"},{"key":"B51","first-page":"299","volume":"3","author":"Murray JM","year":"2012","journal-title":"Case Western Reserve J. Law Tech. Internet"},{"key":"B52","doi-asserted-by":"publisher","DOI":"10.1016\/j.jebo.2006.05.017"},{"key":"B53","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2019.103915"},{"key":"B54","doi-asserted-by":"publisher","DOI":"10.1016\/j.respol.2014.09.005"},{"key":"B55","doi-asserted-by":"publisher","DOI":"10.1257\/aer.20151398"},{"key":"B56","doi-asserted-by":"publisher","DOI":"10.1257\/jep.5.1.29"},{"key":"B57","volume-title":"Navigating the Patent Thicket: Cross Licensing, Patent Pools, and Standard Setting","author":"Shapiro C","year":"2001"},{"key":"B58","doi-asserted-by":"publisher","DOI":"10.1002\/smj.281"},{"key":"B60","doi-asserted-by":"publisher","DOI":"10.1016\/0048-7333(86)90027-2"},{"key":"B61","doi-asserted-by":"publisher","DOI":"10.1016\/j.econlet.2010.12.005"},{"key":"B62","doi-asserted-by":"publisher","DOI":"10.1111\/joie.12032"},{"key":"B63","doi-asserted-by":"publisher","DOI":"10.1257\/pol.20190086"},{"key":"B65","volume-title":"Econometric Analysis of Cross Section and Panel Data","author":"Wooldridge JM","year":"2010","edition":"2"},{"key":"B66","doi-asserted-by":"publisher","DOI":"10.1073\/pnas.93.23.12743"},{"key":"B67","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1040.0208"}],"container-title":["Management Science"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/pubsonline.informs.org\/doi\/pdf\/10.1287\/mnsc.2019.02294","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,2,12]],"date-time":"2025-02-12T16:35:18Z","timestamp":1739378118000},"score":1,"resource":{"primary":{"URL":"https:\/\/pubsonline.informs.org\/doi\/10.1287\/mnsc.2019.02294"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2025,2]]},"references-count":61,"journal-issue":{"issue":"2","published-print":{"date-parts":[[2025,2]]}},"alternative-id":["10.1287\/mnsc.2019.02294"],"URL":"https:\/\/doi.org\/10.1287\/mnsc.2019.02294","relation":{},"ISSN":["0025-1909","1526-5501"],"issn-type":[{"value":"0025-1909","type":"print"},{"value":"1526-5501","type":"electronic"}],"subject":[],"published":{"date-parts":[[2025,2]]}}}