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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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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
Library of Congress subject classification: T Technology > T Technology (General) > T201 Patents. Trademarks
H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System: K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K41 - Litigation Process
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O34 - Intellectual Property Rights: National and International Issues
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O31 - Innovation and Invention: Processes and Incentives
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L24 - Contracting Out; Joint Ventures; Technology Licensing
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 889
Date Deposited: 12 Oct 2009 15:18
URL: http://eprints.lse.ac.uk/25474/

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