An Empirical Analysis of the Adjudication of Patent Cases by the Court of Appeals for the Federal Circuit
36 Pages Posted: 5 Aug 2009
Date Written: August 3, 2009
The enforcement of patent rights affects the scope of the monopoly rights provided by them and hence the incentives they provide. Greater likelihood of a pro-patent decision by the enforcement mechanism provides a larger scope of monopoly rights. I investigate the likelihood of a pro-patent decision by the Court of Appeals for the Federal Circuit in patent cases to see how it varies with characteristics of the patent, the litigants and the litigation itself. This model corrects for the fact that not all patent cases get appealed after trial by incorporating a selection model for the appeal of cases. I also incorporate the litigants' uncertainty about appealing a case using a heteroscedastic selection model. I estimate the model using simulated maximum likelihood and use the GHK simulation method. Results show that overall the Court of Appeals for the Federal Circuit is an anti-patent court. However, significant differences exist between different classes of patents with drug patents being more likely to be decided pro-patent than software patents. The Court of Appeals for the Federal Circuit is found to defer to the decisions of the lower court. We also see an increased likelihood of a pro-patent decision by the appeals court with an increase in the proportion of republican judges on the bench.
JEL Classification: K00, O34
Suggested Citation: Suggested Citation