Antitrust Limits to Patent Settlements

Posted: 22 Jul 2003

See all articles by Carl Shapiro

Carl Shapiro

University of California, Berkeley - Haas School of Business

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Abstract

Patents, patent litigation, and patent settlements increasingly influence competition. Settlements of patent disputes come in many forms, including licensing and cross-licensing agreements, patent pools, mergers, and joint ventures. While frequently procompetitive, such settlements can stifle competition and harm consumers. I propose a specific antitrust rule limiting such settlements: a settlement must leave consumers at least as well off as they would have been from ongoing patent litigation. After establishing that profitable settlements satisfying this constraint generally exist, I show how this antitrust rule can be used to evaluate three types of settlements: mergers, patent pools, and negotiated entry dates.

Suggested Citation

Shapiro, Carl, Antitrust Limits to Patent Settlements. RAND Journal of Economics, Vol. 34, No. 2, Summer 2003. Available at SSRN: https://ssrn.com/abstract=406698

Carl Shapiro (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-5905 (Phone)

HOME PAGE: http://faculty.haas.berkeley.edu

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