The Private Costs of Patent Litigation
43 Pages Posted: 2 May 2007 Last revised: 5 Dec 2014
Date Written: February 1, 2008
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: Suggested Citation