The Private Costs of Patent Litigation

43 Pages Posted: 2 May 2007 Last revised: 5 Dec 2014

James E. Bessen

Boston University - School of Law; Research on Innovation

Michael J. Meurer

Boston University - School of Law

Date Written: February 1, 2008

Abstract

This paper estimates the total cost of patent litigation to alleged infringers. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. We find that the total costs of litigation are much greater than legal fees and costs are large even for lawsuits that settle. Lawsuits cost alleged infringers about $28.7 million ($92) in the mean and $2.9 million in the median. Moreover, infringement risk rose sharply during the late 1990s to over 14% of R&D spending. Small firms have lower risk relative to R&D.

Keywords: patent, litigation, litigation cost, property rights

JEL Classification: O31, O34, K41

Suggested Citation

Bessen, James E. and Meurer, Michael J., The Private Costs of Patent Litigation (February 1, 2008). Boston University School of Law Working Paper No. 07-08; 2nd Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=983736 or http://dx.doi.org/10.2139/ssrn.983736

James E. Bessen (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Research on Innovation ( email )

202 High Head Rd.
Harpswell, ME 04079
United States
617-531-2092 (Phone)

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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