David and Goliath : Patent litigation and its challenges for SMEs

Abstract: The current patent system is by many scholars considered flawed regarding the intended positiveeffects on innovation, especially for small and medium-sized enterprises (SMEs). However, aneffective patent system requires possibilities for firms to enforce their patent rights to fulfil thebasic premise of inspiring innovation. The purpose of this study is to examine the challenges thatSMEs face in patent litigation and how it affects them and their innovation. 14 semi-structuredinterviews were conducted with Chief executive officers or research and development managersof Swedish SMEs to gain insights into the process of patent litigation and its effects on theinterviewed firms. Results showed that R&D investments decreased after patent infringement inmany cases and that firms had a tendency to change the way new patents are written to createstronger patents. The main finding is that patent litigation had a negative effect on SMEs, due tothe high direct and indirect costs resulting from a patent case. This adds to previous researchwhich highlights the disproportionate effects of patent litigation on small firms compared tolarger firms.