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Patent validity and the timing of settlements

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  • Bar, Talia
  • Kalinowski, Jesse

Abstract

We study the timing of settlement in patent disputes, accounting for an alleged infringer’s search for evidence to challenge patent validity. Early settlements are more likely reached when the disputed patent has a low quality, and late settlements take place when the alleged infringer finds strong evidence that challenges patent validity. Thus, there is a tendency to settle disputes over patents that would have likely been invalidated in court. Fee shifting induces more early settlements, and when parties did not settle early, a higher expenditure on invalidating the patent. Our model sheds light on disputes involving patent assertion entities.

Suggested Citation

  • Bar, Talia & Kalinowski, Jesse, 2019. "Patent validity and the timing of settlements," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:indorg:v:67:y:2019:i:c:s0167718719300633
    DOI: 10.1016/j.ijindorg.2019.102535
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    Cited by:

    1. Wang, Ling & Zhang, Yujia & Yan, Yushan, 2023. "Offensive patent litigation strategic choice: An organizational routine perspective," Technovation, Elsevier, vol. 122(C).
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    More about this item

    Keywords

    Patent; Litigation; Infringement; Prior art; Fee shifting; America Invents Act;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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