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Patent litigation settlement in Germany: why parties settle during trial

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  • Katrin Cremers
  • Paula Schliessler

Abstract

This paper looks at the decision to settle patent litigation in Germany by focusing on detailed data on within-trial actions and motivations by plaintiff, defendant and the courts. Using a new dataset covering about 80 % of all patent litigation cases in Germany between 2000 and 2008 we estimate the likelihood of within-trial settlement. We find that the within-trial settlement decision is to some degree driven by the proceedings that change the pre-trial setting of the negotiations in terms of information and stakes and make previously refused settlement a new option. Additionally, firm-specific stakes as measured by the relation of the involved parties to the disputed patent as well as firm-specific strategies are found to affect the general willingness to settle after the filing of a court case. The results suggest that pre-trial failure of settlement negotiations can to some extent be offset by within-trial settlement through efforts made by the court, but that the disposition to settle is to a larger degree determined by firm-specific stakes and strategies in the case. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Katrin Cremers & Paula Schliessler, 2015. "Patent litigation settlement in Germany: why parties settle during trial," European Journal of Law and Economics, Springer, vol. 40(2), pages 185-208, October.
    • Handle: RePEc:kap:ejlwec:v:40:y:2015:i:2:p:185-208
    DOI: 10.1007/s10657-014-9472-x
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    Cited by:

    1. Bersch, Johannes & Degryse, Hans & Kick, Thomas & Stein, Ingrid, 2020. "The real effects of bank distress: Evidence from bank bailouts in Germany," Journal of Corporate Finance, Elsevier, vol. 60(C).
    2. Diegmann, André & Pohlan, Laura & Weber, Andrea, 2024. "Do Politicians Affect Firm Outcomes? Evidence from Connections to the German Federal Parliament," IZA Discussion Papers 17031, Institute of Labor Economics (IZA).
    3. Czarnitzki, Dirk & van Criekingen, Kristof, 2018. "New evidence on determinants of IP litigation: A market-based approach," ZEW Discussion Papers 18-018, ZEW - Leibniz Centre for European Economic Research.
    4. Papageorgiadis, Nikolaos & Procopiou, Andreas & Sofka, Wolfgang, 2023. "Unintended consequences of outcome based compensation – How CEO bonuses, stocks and stock options affect their firms' patent litigation," Research Policy, Elsevier, vol. 52(8).
    5. Horner, Sam & Papageorgiadis, Nikolaos & Sofka, Wolfgang & Angelidou, Sofia, 2022. "Standing your ground: Examining the signaling effects of patent litigation in university technology licensing," Research Policy, Elsevier, vol. 51(10).
    6. Raphael Zingg & Erasmus Elsner, 2020. "Protection heterogeneity in a harmonized European patent system," European Journal of Law and Economics, Springer, vol. 50(1), pages 87-131, August.
    7. Kyung Seo & Yeonbae Kim & Kyunam Kim, 2022. "Strategic and economic behavior of a sued company in patent litigation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 4124-4138, December.
    8. Joachim Henkel & Hans Zischka, 2019. "How many patents are truly valid? Extent, causes, and remedies for latent patent invalidity," European Journal of Law and Economics, Springer, vol. 48(2), pages 195-239, October.
    9. Powell, K. Skylar & Lim, Eunah, 2022. "All or nothing: International coalitions responding to competing pressures in challenges to IP rights," Journal of International Management, Elsevier, vol. 28(3).
    10. Hüschelrath, Kai & Laitenberger, Ulrich, 2015. "The settlement procedure in EC cartel cases: An empirical assesment," ZEW Discussion Papers 15-064, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    Patent; Patent litigation; Settlement; O34; K41;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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