Patent Litigation When Innovation is Cumulative

Llobet, Gerard

doi:10.2139/ssrn.261049

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Patent Litigation When Innovation is Cumulative

CEMFI Working Paper No. 0102

42 Pages Posted: 21 Feb 2001

See all articles by Gerard Llobet

Gerard Llobet

Centre for Monetary and Financial Studies (CEMFI); Centre for Economic Policy Research (CEPR)

Date Written: January 2001

Abstract

This paper studies the effect of litigation as a way to enforce patents when firms hold private information. A structure to the legal system is provided, allowing a better understanding of the settlement and litigation decisions taken by entrepreneurs. The model is broadly consistent with recent empirical evidence. We show that the optimal license consists of a fixed fee and no royalties and that in some cases too much protection might be detrimental to the patentholder. We finally compare different legal systems and their effect on innovation and litigation.

Keywords: Patent Litigation, Licensing, Contracts

JEL Classification: D23, K41, 034

Suggested Citation: Suggested Citation

Llobet, Gerard, Patent Litigation When Innovation is Cumulative (January 2001). CEMFI Working Paper No. 0102, Available at SSRN: https://ssrn.com/abstract=261049 or http://dx.doi.org/10.2139/ssrn.261049