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Patent thickets, courts, and the market for innovation

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  • Alberto Galasso
  • Mark Schankerman

Abstract

We study how fragmentation of patent rights and the formation of the Court of Appeals 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 when patent rights are fragmented and when there is less uncertainty about court outcomes, as was associated with the “pro‐patent shift” of the CAFC. We confirm these predictions empirically using a data set that covers patent suits in U.S. district courts during the period 1975–2000. Finally, we analyze how fragmentation affects total settlement delay, considering both the reduction in dispute duration and the increase in the number of patent negotiations.

Suggested Citation

  • Alberto Galasso & Mark Schankerman, 2010. "Patent thickets, courts, and the market for innovation," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 472-503, September.
    • Handle: RePEc:bla:randje:v:41:y:2010:i:3:p:472-503
    DOI: 10.1111/j.1756-2171.2010.00108.x
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