Endogenous Litigation Costs: An Empirical Analysis of Patent Disputes

35 Pages Posted: 5 Jan 2017 Last revised: 10 Feb 2017

Date Written: January 3, 2017

Abstract

A theoretical literature explains how parties can strategically sink litigation costs to maximize their prospects. We explore this “endogenous litigation costs” hypothesis empirically. To do so, we introduce measures of case progression, establish and validate new proxies for party and court costs, and parse the rich information about litigation contained in novel administrative data from court dockets. As a case study, we use the universe of 16,661 patent cases filed between 2005 and 2010, containing roughly 1.5 million docket entries. We document the costs of litigants and courts throughout litigation, and find that litigation costs cluster around events that must occur in order for litigation to proceed. Finally, we present evidence that costs around stages of litigation are higher for cases that eventually reach later stages of litigation, which we argue is consistent with the endogenous litigation costs hypothesis.

Keywords: Patent, Litigation, Infringement, Docket, Judicial, Workload, Lawsuit, Patent Litigation, Empirical

Suggested Citation

Cotropia, Christopher Anthony and Kesan, Jay P. and Rozema, Kyle and Schwartz, David L., Endogenous Litigation Costs: An Empirical Analysis of Patent Disputes (January 3, 2017). Northwestern Law & Econ Research Paper 17-01; University of Illinois College of Law Legal Studies Research Paper No. 17-14. Available at SSRN: https://ssrn.com/abstract=2893503 or http://dx.doi.org/10.2139/ssrn.2893503

Christopher Anthony Cotropia

University of Richmond School of Law ( email )

28 Westhampton Way
Richmond, VA 23173
United States

Jay P. Kesan

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
217-333-7887 (Phone)
217-244-1478 (Fax)

HOME PAGE: http://www.jaykesan.com

Kyle Rozema

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

HOME PAGE: http://www.kylerozema.com

David L. Schwartz (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

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