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The Private Costs of Patent Litigation

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  • James Bessen

    (Research on Innovation, Boston University School of Law)

  • Michael J. Meurer

Abstract

This paper estimates the total cost of patent litigation to alleged infringers. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. We find that the total costs of litigation are much greater than legal fees and costs are large even for lawsuits that settle. Lawsuits cost alleged infringers about $28.7 million ($92) in the mean and $2.9 million in the median. Moreover, infringement risk rose sharply during the late 1990s to over 14% of R&D spending. Small firms have lower risk relative to R&D.

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  • James Bessen & Michael J. Meurer, 2007. "The Private Costs of Patent Litigation," Working Papers 0701, Research on Innovation.
    • Handle: RePEc:roi:wpaper:0701
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    File URL: http://www.ssrn.com/abstract=983736
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    Cited by:

    1. Lee, Jong-Seon & Kim, Nami & Bae, Zong-Tae, 2019. "The effects of patent litigation involving NPEs on firms’ patent strategies," Technological Forecasting and Social Change, Elsevier, vol. 149(C).
    2. Chondrakis, George, 2016. "Unique synergies in technology acquisitions," Research Policy, Elsevier, vol. 45(9), pages 1873-1889.
    3. Bessen, James, 2008. "The value of U.S. patents by owner and patent characteristics," Research Policy, Elsevier, vol. 37(5), pages 932-945, June.
    4. 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.

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