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Under Threat: Potential Competition, Litigation and the Private Value of Patent Protection

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  • Jean Olson Lanjouw

Abstract

This paper investigates the effect of the threat and occurrence of patent litigation on the private value of patent protection. Potential challenges are introduced into a renewal model as a factor in patentee decisions as to whether a patent is worth maintaining. The model yields testable predictions about renewal probabilities. Data for post WWII German patents support the hypothesis that the need to defend patent rights influences patentee behaviour. The paper concludes with a discussion of how this factor may be incorporated in patent value estimations and what the results imply for the interpretation of patent data.

Suggested Citation

  • Jean Olson Lanjouw, 1992. "Under Threat: Potential Competition, Litigation and the Private Value of Patent Protection," STICERD - Economics of Industry Papers 06, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  • Handle: RePEc:cep:stieip:06
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    File URL: http://sticerd.lse.ac.uk/dps/ei/ei6.pdf
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    References listed on IDEAS

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    1. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters,in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
    2. 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.
    3. Michael J. Meurer, 1989. "The Settlement of Patent Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 77-91, Spring.
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    Cited by:

    1. Jean Olson Lanjouw, 1993. "Patent Protection: Of What Value and for How Long?," NBER Working Papers 4475, National Bureau of Economic Research, Inc.
    2. 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.

    More about this item

    Keywords

    Patents; patent litigation; patent value estimations; litigation; patentee behaviour.;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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