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Explaining the “unpredictable”: An empirical analysis of U.S. patent infringement awards

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  • Mazzeo, Michael J.
  • Hillel, Jonathan
  • Zyontz, Samantha

Abstract

Patent infringement awards are commonly thought to be unpredictable, which raises concerns that patents can lead to unjust enrichment and impede the progress of innovation. We investigate the unpredictability of patent damages by conducting a large-scale econometric analysis of award values. We begin by analyzing the outcomes of 340 cases decided in US federal courts between 1995 and 2008 in which infringement was found and damages were awarded. Our data include the amount awarded, along with information about the litigants, case specifics and economic value of the patents-at-issue. Using these data, we construct an econometric model that explains over 75% of the variation in awards. We further conduct in-depth analysis of the key factors affecting award value, via targeted regressions involving selected variables. We find a high degree of significance between award value and ex ante-identifiable factors collectively, and we also identify significant relationships with accepted indicators of patent value. Our findings demonstrate that infringement awards are not systematically unpredictable and, moreover, highlight the critical elements that can be expected to result in larger or smaller awards.

Suggested Citation

  • Mazzeo, Michael J. & Hillel, Jonathan & Zyontz, Samantha, 2013. "Explaining the “unpredictable”: An empirical analysis of U.S. patent infringement awards," International Review of Law and Economics, Elsevier, vol. 35(C), pages 58-72.
    • Handle: RePEc:eee:irlaec:v:35:y:2013:i:c:p:58-72
    DOI: 10.1016/j.irle.2013.03.001
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    References listed on IDEAS

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    Cited by:

    1. Eric Cardella & Carl Kitchens, 2017. "The impact of award uncertainty on settlement negotiations," Experimental Economics, Springer;Economic Science Association, vol. 20(2), pages 333-367, June.
    2. Akematsu, Yuji & Arai, Koki, 2016. "Estimating the value of generic entry and intellectual property litigation in the pharmaceutical market," Japan and the World Economy, Elsevier, vol. 40(C), pages 16-20.

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    Keywords

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    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • K39 - Law and Economics - - Other Substantive Areas of Law - - - Other
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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