Choudhury & Khana: State-Owned Entities Launching a Global Footprint Using Intellectual Property

ABSTRACT:

We have two major contributions in this paper – firstly, we posit that R&D oriented SOEs can achieve resource independence and launch a global footprint by licensing high quality foreign patents to multinationals. Secondly, we provide a unique theoretical explanation for a long standing result in the emerging market patent reform literature, that patent filing by local firms does not increase post patent reform. We build on institutional and resource dependence theories to posit that a common economic shock that leads to domestic patent reform might also lead SOEs to seek resource independence from government budgetary support. To achieve resource independence, SOEs might file foreign patents and license the same. We study this question in the context of India, where arguably the economic shock in 1991 led to domestic patent reform on the one hand and Indian SOEs seeking resource independence on the other hand. For 42 state-owned labs in India, we offer evidence that the labs increased filing of foreign patents in face of domestic patent reform and an increase in licensing revenue was related to an increase in foreign patents.

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