Strategic patent breadth and entry deterrence with drastic product innovations

This paper examines the innovator's patent breadth decision that maximizes innovation rents when the innovation is drastic, and there is potential entry by a superior quality product and a likelihood of patent challenge. Analytical results show that the innovator can use patent breadth to deter entry, and in most cases, entry deterrence can be accomplished with narrower rather than broader patent protection. When entry cannot be deterred, a narrow patent breadth can enhance product differentiation in a vertically differentiated product market.