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Royalties, evolving patent rights, and the value of innovation

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  • Sherry, Edward F.
  • Teece, David J.

Abstract

The value of an innovation to the innovator can change over time, especially in response to changes in the legal protection (such as patent rights) afforded the innovator. A proven-valid-and-infringed patent is a more valuable economic commodity than is an untested patent. The increase in value can be estimated using the success rate of patent lawsuits. Using a database of the outcomes of U.S. patent litigation, we find that plaintiffs win patent litigation some 45% of the time at the trial court level. This has implications both for patent damages awards and for the incentives to innovate. © 2003 Elsevier B. V. All rights reserved.
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Suggested Citation

  • Sherry, Edward F. & Teece, David J., 2004. "Royalties, evolving patent rights, and the value of innovation," Research Policy, Elsevier, vol. 33(2), pages 179-191, March.
    • Handle: RePEc:eee:respol:v:33:y:2004:i:2:p:179-191
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    More about this item

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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