The Private Costs of Patent Litigation
James E. Bessen
Boston University - School of Law; Research on Innovation
Michael J. Meurer
Boston University - School of Law
February 1, 2008
Boston University School of Law Working Paper No. 07-08
2nd Annual Conference on Empirical Legal Studies Paper
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.
Number of Pages in PDF File: 43
Keywords: patent, litigation, litigation cost, property rights
JEL Classification: O31, O34, K41
Date posted: May 2, 2007 ; Last revised: December 5, 2014
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