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Enforcing Intellectual Property Rights

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  • Jean Olson Lanjouw
  • Mark Schankerman

Abstract

We study the determinants of patent suits and their outcomes over the period 1978-1999 by linking detailed information from the U.S. patent office, the federal court system, and industry sources. The probability of being involved in a suit is very heterogeneous, being much higher for valuable patents and for patents owned by individuals and smaller firms. Thus the patent system generates incentives, net of expected enforcement costs, that differ across inventors. Patentees with a large portfolio of patents to trade, or having other characteristics that encourage 'cooperative' interaction with disputants, more successfully avoid court actions. At the same time, key post-suit outcomes do not depend on observed characteristics. This is good news: advantages in settlement are exercised quickly, before extensive legal proceedings consume both court and firm resources. But it is bad news in that the more frequent involvement of smaller patentees in court actions is not offset by a more rapid resolution of their suits. However, our estimates of the heterogeneity in litigation risk can facilitate development of private patent litigation insurance to mitigate this adverse affect of high enforcement costs.

Suggested Citation

  • Jean Olson Lanjouw & Mark Schankerman, 2001. "Enforcing Intellectual Property Rights," NBER Working Papers 8656, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8656
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    1. Bronwyn H. Hall & Stuart Graham & Dietmar Harhoff & David C. Mowery, 2004. "Prospects for Improving US Patent Quality via Postgrant Opposition," NBER Chapters, in: Innovation Policy and the Economy, Volume 4, pages 115-144, National Bureau of Economic Research, Inc.
    2. Carmen Cotei & Joseph Farhat, 2018. "The M&A exit outcomes of new, young firms," Small Business Economics, Springer, vol. 50(3), pages 545-567, March.
    3. Christine Greenhalgh & Mark Rogers, 2007. "The Value of Intellectual Property Rights to Firms," Economics Series Working Papers 319, University of Oxford, Department of Economics.
    4. Harhoff, Dietmar & Graham, Stuart J.H., 2006. "Can Post-Grant Reviews Improve Patent System Design? A Twin Study of US and European Patents," CEPR Discussion Papers 5680, C.E.P.R. Discussion Papers.
    5. Penin, Julien, 2005. "Patents versus ex post rewards: A new look," Research Policy, Elsevier, vol. 34(5), pages 641-656, June.
    6. Carmen Cotei & Joseph Farhat & Indu Khurana, 2022. "The impact of policy uncertainty on the M&A exit of startup firms," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(1), pages 99-120, January.
    7. Clément Bonnet, 2016. "Measuring Knowledge with Patent Data: an Application to Low Carbon Energy Technologies," EconomiX Working Papers 2016-37, University of Paris Nanterre, EconomiX.
    8. Kenneth Guang-Lih Huang & Xuesong Geng & Heli Wang, 2017. "Institutional Regime Shift in Intellectual Property Rights and Innovation Strategies of Firms in China," Organization Science, INFORMS, vol. 28(2), pages 355-377, April.
    9. Juranek, Steffen, 2015. "Investing in legal advice - What determines the costs of enforcing intellectual property rights?," Discussion Papers 2015/20, Norwegian School of Economics, Department of Business and Management Science.
    10. Bronwyn H. Hall, 2003. "Business Method Patents, Innovation, and Policy," NBER Working Papers 9717, National Bureau of Economic Research, Inc.
    11. Martin S. Meyer & Puay Tang, 2007. "Exploring the “value” of academic patents: IP management practices in UK universities and their implications for Third-Stream indicators," Scientometrics, Springer;Akadémiai Kiadó, vol. 70(2), pages 415-440, February.
    12. Christine Greenhalgh & Padraig Dixon, 2002. "The Economics of Intellectual Property: A Review to Identify Themes for Future Research," Economics Series Working Papers 135, University of Oxford, Department of Economics.
    13. Clément Bonnet, 2017. "Measuring Inventive Performance with Patent Data: an Application to Low Carbon Energy Technologies," Working Papers 1709, Chaire Economie du climat.
    14. Ottoz, Elisabetta & Cugno, Franco, 2016. "Side payments, litigation risk and settlement outcomes," Information Economics and Policy, Elsevier, vol. 35(C), pages 76-81.
    15. Kenneth G Huang & Jiatao Li, 2019. "Adopting knowledge from reverse innovations? Transnational patents and signaling from an emerging economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(7), pages 1078-1102, September.
    16. Clement Bonnet, 2020. "Measuring Knowledge with Patent Data: an Application to Low Carbon Energy Technologies," Working Papers hal-02971680, HAL.
    17. Catalina Martinez & Pluvia Zuniga, 2017. "Contracting for technology transfer: patent licensing and know-how in Brazil," Industry and Innovation, Taylor & Francis Journals, vol. 24(6), pages 659-689, August.
    18. Srinivasan, Raji & Lilien, Gary L. & Rangaswamy, Arvind, 2008. "Survival of high tech firms: The effects of diversity of product–market portfolios, patents, and trademarks," International Journal of Research in Marketing, Elsevier, vol. 25(2), pages 119-128.
    19. Patrick Cohendet & Matthieu Farcot & Julien Pénin, 2009. "Intellectual property in a knowledge-based economy : Patents to include vs. patents to exclude," Working Papers of BETA 2009-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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    More about this item

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • 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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