Patent Validity and Litigation: Evidence from U.S. Inter Partes Review
The Journal of Law & Economics (forthcoming)
37 Pages Posted: 20 Nov 2020 Last revised: 21 Jul 2022
Date Written: July 20, 2022
We analyze how new information concerning the validity of a patent impacts the settlement of patent infringement litigation. A party accused of patent infringement in the U.S. may—in parallel with defending itself in court— challenge the validity of the allegedly infringed patent by petitioning the Patent Trial and Appeal Board (PTAB), an administrative tribunal within the U.S. Patent and Trademark Office. PTAB proceedings generate new information concerning the validity of challenged patents, and we study empirically the resulting effect on settlement of (i) the filing of a petition to challenge a patent’s validity and (ii) PTAB’s initial decision to “institute” (that is, grant) or deny the petition based on its assessment of a “reasonable likelihood” of invalidity. We find that both decision points have large, positive effects on the settlement of parallel court proceedings
Keywords: Litigation, patents, settlement, inter partes review, U.S.
JEL Classification: K41, O34
Suggested Citation: Suggested Citation