Does shareholder overlap alleviate patent holdup?

Heng Geng, Harald Hau, Sandy Lai and Pengfei Liu

Research Policy, 2025, vol. 54, issue 2

Abstract: Patent protection can generate holdup problems for follow-on innovators when technologies protected in early patents complement their inventions. This study investigates whether institutional shareholder overlap between firms with precursory patents and follow-on innovators can reduce such patent holdup problems. Using patent citation links to track complementary patents, we find empirical support for such a holdup attenuation hypothesis of institutional shareholder overlap. Follow-on innovators with greater institutional shareholder overlap to precursory patent owners enjoy greater success with their patent portfolio, face less patent conflict as measured by patent litigation, and feature higher levels of R&D investments. The holdup attenuation effect is stronger if product complexity makes securing ex ante patent licenses more difficult.

Keywords: Patents; Holdup problems; Innovation; Institutional ownership (search for similar items in EconPapers)
JEL-codes: G31 G32 L22 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:54:y:2025:i:2:s0048733324002166

DOI: 10.1016/j.respol.2024.105167

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