Disrupting the Disrupter: Strategic Countermeasures to Attack the Business Model of a Coercive Patent-Holding Firm

Abstract

A coercive patent-holding firm operates a business model that strategically targets firms to force unforeseen patent licensing rents. Coercive patent holders use aggressive litigation tactics to instantaneously create a complicated asymmetrical expensive problem with significant business risk. The strategy creates a dominant position by leveraging legal and business pressure to force the targeted firm into an involuntarily engagement with a coercive patent-holding firm. Such engagements can be quite profitable for the patent holders - and quite devastating for targeted firms. Thus, this article attempts to synthesize a business model framework that reveals insights concerning the profit formula, key resources, and key processes that support the dominant position of coercive patent-holding firms. Based on this framework, we further synthesize countermeasures to disrupt these business model elements and diminish the dominant position. The insights and countermeasures reveal strategic options and tactics that can be leveraged against the business model of a coercive patent-holding firm to alter the dominant position and improve the business situation of the targeted firm.