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Patent Suits: Do They Distort Research Incentives?

  • Lanjouw, Jenny
  • Schankerman, Mark
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    This paper shows that the process of enforcing patent rights both dilutes and distorts Research and Development (R&D) incentives. We examine the characteristics of litigated patents by combining, for the first time, information about patent case filings from the US district courts with detailed data from the US Patent and Trademark Office. By comparing filed cases to a random sample of US patents from the same cohorts and technology areas, we show that case filings are much more common in some technology areas than in others, and also when (i) innovations are more valuable, (ii) they appear to form the basis of a sequence of technologically-linked innovations held by the patentee, (iii) there is domestic ownership, and (iv) they are owned by individuals, except in cases where others are active in the same technology area making reputation important. We use this empirical evidence to examine hypotheses about the determinants of patent suits.

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    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2042.

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    Date of creation: Dec 1998
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    Handle: RePEc:cpr:ceprdp:2042
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    1. Jean O. Lanjouw & Josh Lerner, 1996. "Preliminary Injunctive Relief: Theory and Evidence from Patent Litigation," NBER Working Papers 5689, National Bureau of Economic Research, Inc.
    2. Fournier, Gary M & Zuehlke, Thomas W, 1989. "Litigation and Settlement: An Empirical Approach," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 189-95, May.
    3. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-97, September.
    4. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
    5. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," NBER Working Papers 3993, National Bureau of Economic Research, Inc.
    6. Jean O. Lanjouw & Mark Schankerman, 1997. "Stylized Facts of Patent Litigation: Value, Scope and Ownership," NBER Working Papers 6297, National Bureau of Economic Research, Inc.
    7. Waterson, Michael, 1990. "The Economics of Product Patents," American Economic Review, American Economic Association, vol. 80(4), pages 860-69, September.
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