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Side payments, litigation risk and settlement outcomes

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  • Ottoz, Elisabetta
  • Cugno, Franco

Abstract

We offer a simple model of patent settlement for examining how litigation prospects, patent strength and expected damage awards affect consumer benefits stemming from settlement agreements providing for per-unit royalties and non-negative fixed fees. The result shows that consumers may be harmed if expected damage payments forgone by settlement lead to agreements with high royalty payments that benefit both the patent holder and licensee at the expense of the consumer.

Suggested Citation

  • Ottoz, Elisabetta & Cugno, Franco, 2016. "Side payments, litigation risk and settlement outcomes," Information Economics and Policy, Elsevier, vol. 35(C), pages 76-81.
    • Handle: RePEc:eee:iepoli:v:35:y:2016:i:c:p:76-81
    DOI: 10.1016/j.infoecopol.2016.02.001
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    References listed on IDEAS

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    7. Shapiro, Carl, 1985. "Patent Licensing and R&D Rivalry," American Economic Review, American Economic Association, vol. 75(2), pages 25-30, May.
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    Cited by:

    1. Kyung Seo & Yeonbae Kim & Kyunam Kim, 2022. "Strategic and economic behavior of a sued company in patent litigation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 4124-4138, December.

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    More about this item

    Keywords

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    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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