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Settling The Controversy Over Patent Settlements: Payments By The Patent Holder Should Be Per Se Illegal

In: Antitrust Law and Economics

Author

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  • Cristofer Leffler
  • Keith Leffler

Abstract

Under the patent system created by Congress a patent enjoys only a rebuttable presumption of validity. The resulting probability of invalidity has an economic value. The incentive for a challenger to capture that value creates consumer benefit. In contrast, a payment by the patent holder to the challenger to recognize validity changes the congressionally mandated rebuttable presumption into a conclusive presumption. When a patent holder enlarges the reward granted to him by Congress, by paying a potential rival to confess validity, he reduces efficiency and consumer welfare and, therefore, commits a per se violation of the antitrust laws.

Suggested Citation

  • Cristofer Leffler & Keith Leffler, 2004. "Settling The Controversy Over Patent Settlements: Payments By The Patent Holder Should Be Per Se Illegal," Research in Law and Economics, in: Antitrust Law and Economics, pages 475-504, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rlwezz:s0193-5895(04)21010-7
    DOI: 10.1016/S0193-5895(04)21010-7
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    Cited by:

    1. Sencer Ecer & Rodrigo Montes & David Weiskopf, 2020. "On the Application of Nash Bargaining in Reverse Payment Cases in the Pharmaceutical Industry," European Journal of Law and Economics, Springer, vol. 50(1), pages 133-147, August.

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