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Process innovations, patent litigation and time effects

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  • Barrenechea, Martin

Abstract

In this work we extend the model developed in (Aoki and Hu, 2003) in order to cover cost reduction innovations, instead of product innovations originally developed on that article. The results show that smaller innovations are more licensable. Regarding the time factors, infringers like faster innovation and patentees prefer bigger innovations and longer imitation periods. Under some suitable situations, litigation time could support innovation and discourage infringement. However the patent life has ambiguous effects and may promote infringement.

Suggested Citation

  • Barrenechea, Martin, 2015. "Process innovations, patent litigation and time effects," MPRA Paper 65842, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:65842
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    References listed on IDEAS

    as
    1. Michael J. Meurer, 1989. "The Settlement of Patent Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 77-91, Spring.
    2. Reiko Aoki & Jin‐Li Hu, 1999. "Licensing vs. Litigation: The Effect of the Legal System on Incentives to Innovate," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(1), pages 133-160, March.
    3. Reiko Aoki & Jin-Li Hu, 2003. "Time Factors of Patent Litigation and Licensing," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(2), pages 280-301, June.
    4. Joseph Farrell & Carl Shapiro, 2008. "How Strong Are Weak Patents?," American Economic Review, American Economic Association, vol. 98(4), pages 1347-1369, September.
    5. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
    6. James Bessen & Michael J. Meurer, 2008. "Introduction to Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk," Introductory Chapters, in: Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, Princeton University Press.
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    More about this item

    Keywords

    Patents; innovation Policy; Applied Game Theory;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General

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