Working Paper: CEPR ID: DP6946
Authors: Alberto Galasso; Mark Schankerman
Abstract: We study how fragmentation of patent rights ('patent thickets') and the formation of the Court of Appeal for the Federal Circuit (CAFC) affected the duration of patent disputes, and thus the speed of technology diffusion through licensing. We develop a model of patent litigation which predicts faster settlement agreements when patent rights are fragmented and when there is less uncertainty about court outcomes, as was associated with the 'pro-patent shift' of CAFC. The model also predicts that the impact of fragmentation on settlement duration should be smaller under CAFC. We confirm these predictions empirically using a dataset that covers nearly all patent suits in U.S. federal district courts during the period 1975-2000. Finally, we analyze how fragmentation affects total settlement delay, taking into account both reduction in duration per dispute and the increase in the number of required patent negotiations associated with patent thickets.
Keywords: anticommons; court of appeals for the federal circuit; litigation; patent thickets; patents; settlement
JEL Codes: K41; L24; O31; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| patent fragmentation (F12) | quicker settlement agreements (J52) |
| CAFC establishment (F53) | reduced settlement delays (G51) |
| CAFC establishment (F53) | stronger effect in lower courts (K40) |
| fragmentation (F12) | increased total settlement delay (G33) |
| fragmentation (F12) | smaller impact on settlement delays under CAFC regime (G28) |