Private–collective innovation, competition, and firms’ counterintuitive appropriation strategies

We extend theory on private–collective innovation by studying the role of exclusion rights for technology in the competition between private–collective and other innovators. We argue that private–collective innovators both pledge their own and invest in orphan exclusion rights for technology as a subtle coordination mechanism to compete against firms proposing alternative proprietary solutions. We discuss implications of our findings for theories of innovation, particularly appropriation strategy, ownership and control, and coordination and industry self-regulation.

► We study the puzzle of why firms waive patents to OSS yet continue to purchase IPRs.
► We pose that solving the puzzle requires extending theory on private–collective (p–c) innovation.
► Patents by proprietary innovators threaten the business model of p–c innovators.
► Patent waivers by p–c firms create norms of non-enforcement for all producing firms.
► Acquiring and waiving of further rights is a defense against non-producing firms.