Patent Litigation with Endogenous Disputes

Posted: 4 Nov 2009

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Michael J. Meurer

Boston University - School of Law

Date Written: 2006

Abstract

A model of patent dispute resolution, which alsoconsiders early stage patent and development investments by both the patentowner and the possible defendant, is presented. The model is comprised of three stages involving an investment firm and aninfringing firm. The three stages of the model are described: 1)stage oneconsists of the investment firmchoosing an investment in patent"refinement"; 2) stage two addresses the investment choices of bothfirms; and 3) stage three describes the four possible outcomes of thesituation. Using the Nash equilibrium to analyze the stages of the model, the solutionsregarding settlement, lawsuit, acquiescence and deterrence are discussed.Profitability of each firm is examined. The implications of the model areanalyzed, including the probability of litigation and the disparity of R&Dspending among industries. The model provides a means of measuring the impact of the patent law changesupon the certainty of patent rights, as well as on profit, developmentinvestment, and patenting behaviors. (AKP)

Keywords: Patent infringements, Patent law, Patent litigation, Patents, Intellectual property, Licenses, Litigation

Suggested Citation

Bessen, James E. and Meurer, Michael J., Patent Litigation with Endogenous Disputes (2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1497855

James E. Bessen (Contact Author)

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Michael J. Meurer

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-6292 (Phone)
617-353-3077 (Fax)

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