Working Paper: NBER ID: w28496
Authors: James A. Brander; Barbara J. Spencer
Abstract: This paper examines intellectual property litigation as a method of protection from patent-infringing imports. Claims against patent-infringing imports entering the United States may be filed before the International Trade Commission (ITC) or in district court. The ITC applies injunctions (import prohibitions) that would seem to provide more protection from infringing imports than the standard license fee remedy in court. Settlements prior to legal adjudication are common in both venues. Using a model with Nash bargaining and Cournot competition, we show that an ITC filing may restrict imports by less than in court. This result tends to apply if product differentiation is high and the size of the patented cost-reducing innovation is large.
Keywords: No keywords provided
JEL Codes: C70; F12; F13; K41; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ITC filings (L96) | lower import levels (F14) |
| court filings (K41) | higher import levels (F14) |
| product differentiation (L15) | ITC filings lead to negotiated settlements (L49) |
| size of patented innovation (O34) | ITC filings lead to negotiated settlements (L49) |
| type of innovation (O35) | effectiveness of ITC as a venue (L15) |
| product differentiation (L15) | preference for monopoly outcome (D42) |
| ITC filings (L96) | negotiated settlement with royalty (J52) |
| court cases (K41) | adjudicated royalties (K41) |