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The Selection Effects (and Lack Thereof) in Patent Litigation: Evidence from Trials

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  • Marco Alan C.

    (Vassar College)

Abstract

Using a selection corrected probit, I estimate the probability that patents will be found valid and infringed at trial. I combine for the first time detailed adjudication data with detailed patent data. I find that the selection effects for validity adjudications and infringement adjudications differ systematically. Additionally, infringement estimates do not appear to suffer from a substantial selection bias. The results highlight the importance of correctly specifying the selection mechanism in policy analysis. In contrast with previous studies, I find that the win rate for patents that go to trial is biased towards 50%. The bias is much more substantial for validity decisions, where I find unconditional win rates of 75% for adjudicated patents and 85% for matched patents. Win rates conditional on adjudication are below 60%.

Suggested Citation

  • Marco Alan C., 2004. "The Selection Effects (and Lack Thereof) in Patent Litigation: Evidence from Trials," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-47, September.
    • Handle: RePEc:bpj:bejeap:v:topics.4:y:2004:i:1:n:21
    DOI: 10.2202/1538-0653.1226
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    References listed on IDEAS

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    1. Panel on Estimates of Poverty for Small Geographic Areas of which Allen L. Schirm is a member, "undated". "Small-Area Income and Poverty Estimates: Priorities for 2000 and Beyond," Mathematica Policy Research Reports a0588a6815864c46b8974e1d1, Mathematica Policy Research.
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    Cited by:

    1. Mark A. Lemley & Carl Shapiro, 2005. "Probabilistic Patents," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 75-98, Spring.
    2. Scott E. Atkinson & Alan C. Marco & John L. Turner, 2009. "The Economics of a Centralized Judiciary: Uniformity, Forum Shopping, and the Federal Circuit," Journal of Law and Economics, University of Chicago Press, vol. 52(3), pages 411-443, August.
    3. Marco, Alan C., 2005. "The option value of patent litigation: Theory and evidence," Review of Financial Economics, Elsevier, vol. 14(3-4), pages 323-351.
    4. Gaétan de Rassenfosse & William E. Griffiths & Adam B. Jaffe & Elizabeth Webster, 2021. "Low-Quality Patents in the Eye of the Beholder: Evidence from Multiple Examiners," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 37(3), pages 607-636.
    5. Shawn P. Miller & Alexander Tabarrok, 2014. "Ill-Conceived, Even If Competently Administered: Software Patents, Litigation, and Innovation—A Comment on Graham and Vishnubhakat," Econ Journal Watch, Econ Journal Watch, vol. 11(1), pages 37-45, January.

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