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Evaluating Patent Rights With Possible Patent Litigation


  • Deng Yi

    () (University of South Florida)


This paper examines how possible patent infringement and litigation may affect patent holders’ renewal decisions as well as our evaluation of underlying patent value. We utilize the renewal records of the EPO (European Patent Office) patents and estimate a stochastic patent renewal model in which patent holders face possible infringement and litigation costs. Estimation results indicate that when such possibilities exist, patent holders’ renewal behavior will change substantially, and our estimates of patent value based on a stochastic renewal model become significantly higher. Model simulations also reveal that the possible patent infringement and litigation, litigation costs, and patent renewal costs all play important roles in inventors’ patenting behavior.

Suggested Citation

  • Deng Yi, 2012. "Evaluating Patent Rights With Possible Patent Litigation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-22, March.
  • Handle: RePEc:bpj:bejeap:v:12:y:2012:i:1:n:11

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    References listed on IDEAS

    1. Jean Olson Lanjouw, 1994. "Economic Consequences of a Changing Litigation Environment: The Case of Patents," NBER Working Papers 4835, National Bureau of Economic Research, Inc.
    2. repec:adr:anecst:y:1998:i:49-50 is not listed on IDEAS
    3. Jean Lanjouw & Josh Lerner, 1998. "The Enforcement of Intellectual Property Rights: A Survey of the Empirical Literature," Annals of Economics and Statistics, GENES, issue 49-50, pages 223-246.
    4. Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-784, July.
    5. Pakes, Ariel & Pollard, David, 1989. "Simulation and the Asymptotics of Optimization Estimators," Econometrica, Econometric Society, vol. 57(5), pages 1027-1057, September.
    6. Lerner, Josh, 1995. "Patenting in the Shadow of Competitors," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 463-495, October.
    7. James E. Bessen & Michael J. Meurer, 2006. "Patent Litigation with Endogenous Disputes," American Economic Review, American Economic Association, vol. 96(2), pages 77-81, May.
    8. Claude Crampes & Corinne Langinier, 2002. "Litigation and Settlement in Patent Infringement Cases," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 258-274, Summer.
    9. Deng, Yi, 2007. "The effects of patent regime changes: A case study of the European patent office," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 121-138, February.
    10. repec:adr:anecst:y:1998:i:49-50:p:08 is not listed on IDEAS
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