Working Paper: CEPR ID: DP3093
Authors: Jean O. Lanjouw; Mark Schankerman
Abstract: We study the determinants of patent suits and their outcomes over the period 1978-99 by linking detailed information from the U.S. patent office, the federal court system, and industry sources. The probability of being involved in a suit is very heterogeneous, being much higher for valuable patents and for patents owned by individuals and smaller firms. Thus the patent system generates incentives, net of expected enforcement costs, that differ across inventors. Patentees with a large portfolio of patents to trade, or having other characteristics that encourage ?cooperative? interaction with disputants, more successfully avoid court actions. At the same time, key post-suit outcomes do not depend on observed characteristics. This is good news: advantages in settlement are exercised quickly, before extensive legal proceedings consume both court and firm resources. But it is bad news in that the more frequent involvement of smaller patentees in court actions is not offset by a more rapid resolution of their suits. Our estimates of the heterogeneity in litigation risk can, however, facilitate development of private patent litigation insurance to mitigate this adverse affect of high enforcement costs.
Keywords: court actions; patents
JEL Codes: K41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| patent value (O34) | probability of being involved in a patent suit (K41) |
| patent characteristics (O34) | postsuit outcomes (K41) |
| portfolio size (G11) | probability of being involved in a patent suit (K41) |
| technology concentration (L63) | probability of being involved in a patent suit (K41) |