Patent Litigation as an Information Transmission Mechanism
AbstractPatent litigation reveals important information about the validity of the contested patent to other potential entrants. This paper explores the implications of such informational externalities for entry dynamics in the presence of multiple potential entrants. The nature of the entry game can be one of either waiting or preemption depending on the degree of patent protection. Therefore, the payoffs for the patentee and the initial imitator are discontinuous in the degree of patent protection. Furthermore, strengthening intellectual property rights is not necessarily desirable for the patentee. The analysis may also help explain the apparently puzzling practice of delaying patent suits. Copyright 1998 by American Economic Association.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1997-17.
Date of creation: 1997
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Other versions of this item:
- Choi, Jay Pil, 1998. "Patent Litigation as an Information-Transmission Mechanism," American Economic Review, American Economic Association, vol. 88(5), pages 1249-63, December.
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