Why do firms give away their patents for free?

• Analysis of reasons for firms not retaining rights in their patents.
• Data from specific patent release cases examined and grouped.
• Main reasons were profit making, cost cutting, innovation catalysing and technology providing.

Within the trend of increasing patent commercialisation and open innovation, a recent phenomenon where firms give away their patents free of charge can be observed. This seems contradictory to the original intention of the patent system (enabling firms to create temporary monopolies to appropriate returns from their R&D investments). Consequently, this paper explores why firms make their patents available for free and which benefits they may gain from this behaviour. Adopting the open source software phenomenon as a background and using firm data from 26 patent release cases, we identify a typology consisting of four motives of ‘free patent release approaches’: profit making, cost cutting, innovation catalysing, technology providing. Further, we discuss the motives of these firms to offer their patents as ‘open source’. We find that firms may obtain valuable technological input for subsequent innovations as well as social benefits in return for their free patent release.

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