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Patents, Litigation Strategy and Antitrust in Innovative Industries

Author

Listed:
  • Steffen Juranek

    (Norwegian School of Economics)

  • Thomas Quan

    (University of Georgia)

  • John L. Turner

    (University of Georgia)

Abstract

In a patent infringement suit, the alleged infringer wins with a ruling of either invalidity or non-infringement, and may strictly prefer either outcome. Invalidity may increase current-period competition, but removes constraints to future innovation. We adapt the Segal and Whinston (Am Econ Rev 97(5):1703–1730, 2007) model, and show that a legal regime that considers infringement before validity maximizes the entrant patentee’s innovation incentives. But the incumbent alleged infringer may prefer litigating validity first if the future blocking effect of validity is strong. This litigation strategy effect may reduce innovation levels. Antitrust policy should seek to attenuate this effect by reducing the advantage to incumbency.

Suggested Citation

  • Steffen Juranek & Thomas Quan & John L. Turner, 2020. "Patents, Litigation Strategy and Antitrust in Innovative Industries," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 667-696, June.
    • Handle: RePEc:kap:revind:v:56:y:2020:i:4:d:10.1007_s11151-020-09756-0
    DOI: 10.1007/s11151-020-09756-0
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    References listed on IDEAS

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      • Cremers, Katrin & Ernicke, Max & Gaessler, Fabian & Harhoff, Dietmar & Helmers, Christian & McDonagh, Luke & Schliessler, Paula & Van Zeebroeck, Nicolas, 2013. "Patent litigation in Europe," ZEW Discussion Papers 13-072, ZEW - Leibniz Centre for European Economic Research.
      • Katrin Cremers & Max Ernicke & Fabian Gaessler & Dietmar Harhoff & Christian Helmers & Luke Mc Donagh & Paula Schliessler & Nicolas van Zeebroeck, 2017. "Patent litigation in Europe," ULB Institutional Repository 2013/226239, ULB -- Universite Libre de Bruxelles.
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    Cited by:

    1. Roger D. Blair, 2020. "The Intellectual Property-Antitrust Interface," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 557-561, June.

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    More about this item

    Keywords

    Antitrust; Innovation; Invalidity; Litigation; Non-infringement; Patents;
    All these keywords.

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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