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Patent thickets and the market for innovation: evidence from settlement of patent disputes

Galasso, Alberto and Schankerman, Mark (2008) Patent thickets and the market for innovation: evidence from settlement of patent disputes. CEP Discussion Papers, 889. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 889

Abstract

We study how fragmentation of patent rights (‘patent thickets’) and the formation of the Court of Appeal for the Federal Circuit (CAFC) affected the duration of patent disputes, and thus the speed of technology diffusion through licensing. We develop a model of patent litigation which predicts faster settlement agreements when patent rights are fragmented and when there is less uncertainty about court outcomes, as was associated with the ‘pro-patent shift’ of CAFC. The model also predicts that the impact of fragmentation on settlement duration should be smaller under CAFC. We confirm these predictions empirically using a dataset that covers nearly all patent suits in U.S. federal district courts during the period 1975-2000. Finally, we analyze how fragmentation affects total settlement delay, taking into account both reduction in duration per dispute and the increase in the number of required patent negotiations associated with patent thickets.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk/case/_new/publications/se...
Additional Information: © 2008 the authors
Subjects: T Technology > T Technology (General) > T201 Patents. Trademarks
H Social Sciences > HB Economic Theory
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Series: Working Papers > CEP Discussion Papers
Date Deposited: 12 Oct 2009 15:18
Last Modified: 14 Nov 2012 10:19
URI: http://eprints.lse.ac.uk/id/eprint/25474

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