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Patent Quality and Settlement among Repeat Patent Litigants

31 Pages Posted: 20 Sep 2010 Last revised: 30 Sep 2012

John R. Allison

University of Texas - McCombs School of Business

Joshua H. Walker

Simpson Thacher & Bartlett LLP; Stanford Law School

Mark A. Lemley

Stanford Law School

Date Written: September 16, 2010

Abstract

Repeat patent plaintiffs - those who sue eight or more times on the same patents - have a disproportionate effect on the patent system. They are responsible for a sizeable fraction of all patent lawsuits. Their patents should be among the strongest, according to all economic measures of patent quality. And logic suggests that repeat patent plaintiffs should be risk averse, settling more of their cases and taking only the very best to trial to avoid having their patents invalidated. In this paper, we test those hypotheses. We find that repeat patent plaintiffs are somewhat more likely to settle their cases. But, to our surprise, we find that when they do go to trial or judgment, overwhelmingly they lose. This result seems to be driven by two parallel findings: both software patents and patents owned by non-practicing entities (so-called "patent trolls") fare extremely poorly in court. We offer some possible explanations for why a group of apparently weak patents nonetheless have so much influence over the patent system, and some preliminary thoughts about how these findings should shape the patent reform debate.

Keywords: patent, settlement, empirical, trolls, NPEs, litigation studies

JEL Classification: O34

Suggested Citation

Allison, John R. and Walker, Joshua H. and Lemley, Mark A., Patent Quality and Settlement among Repeat Patent Litigants (September 16, 2010). Stanford Law and Economics Olin Working Paper No. 398. Available at SSRN: https://ssrn.com/abstract=1677785 or http://dx.doi.org/10.2139/ssrn.1677785

John R. Allison (Contact Author)

University of Texas - McCombs School of Business ( email )

CBA 5.202
University of Texas at Austin
Austin, TX 78712
United States

Joshua H. Walker

Simpson Thacher & Bartlett LLP

2550 Hanover Street
Palo Alto, CA 94304
United States

Stanford Law School ( email )

Stanford, CA
United States

Mark A. Lemley

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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