IDEAS home Printed from https://ideas.repec.org/p/doj/eagpap/201102.html
   My bibliography  Save this paper

Signaling, Learning and Screening Prior to Trial: Informational Implications of Preliminary Injunctions

Author

Listed:
  • Thomas D. Jeitschko

    (Economic Analysis Group, Antitrust Division, U.S. Department of Justice)

  • Byung-Cheol Kim

Abstract

The decision to request a preliminary injunction—a court order that bans a party from certain actions until their lawfulness are ascertained in a final court ruling at trial—is an important litigation instrument in many areas of the law including antitrust, copyright, patents, trademarks, employment and labor relations as well as contracts. The process of filing for a preliminary injunction and the court's ruling on such a request generates information that can affect possible settlement decisions. We consider these implications when there is uncertainty about both the plaintiff's damages as well as the merits of case in the eyes of the court. Both plaintiff and defendant revise their beliefs about the case strength in dispute once they observe the court's ruling on preliminary injunctive relief. We study how such learning affects the likelihood of settlement. A precursor to this analysis is the study of the strategic role of preliminary injunctions as a means to signal the plaintiff's willingness to settle.

Suggested Citation

  • Thomas D. Jeitschko & Byung-Cheol Kim, 2011. "Signaling, Learning and Screening Prior to Trial: Informational Implications of Preliminary Injunctions," EAG Discussions Papers 201102, Department of Justice, Antitrust Division.
    • Handle: RePEc:doj:eagpap:201102
    as

    Download full text from publisher

    File URL: https://www.justice.gov/atr/public/eag/267542a.html
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bizjak, John M & Coles, Jeffrey L, 1995. "The Effect of Private Antitrust Litigation on the Stock-Market Valuation of the Firm," American Economic Review, American Economic Association, vol. 85(3), pages 436-461, June.
    2. Kathryn E. Spier, 1992. "The Dynamics of Pretrial Negotiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 93-108.
    3. Mark A. Lemley & Carl Shapiro, 2005. "Probabilistic Patents," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 75-98, Spring.
    4. Choné, Philippe & Linnemer, Laurent, 2010. "Optimal litigation strategies with observable case preparation," Games and Economic Behavior, Elsevier, vol. 70(2), pages 271-288, November.
    5. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 2, number 2.
    6. Andrew F. Daughety & Jennifer F. Reinganum, 2002. "Informational Externalities in Settlement Bargaining: Confidentiality and Correlated Culpability," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 587-604, Winter.
    7. Lisa L. Posey, 1998. "The Plaintiff's Attorney in the Liability Insurance Claims Settlement Process: A Game Theoretic Approach," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 21(2), pages 119-137.
    8. Philippe Choné & Laurent Linnemer, 2008. "Optimal Litigation Strategies with Signaling and Screening," CESifo Working Paper Series 2334, CESifo.
    9. Lanjouw, Jean O & Lerner, Josh, 2001. "Tilting the Table? The Use of Preliminary Injunctions," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 573-603, October.
    10. John R. Boyce & Aidan Hollis, 2007. "Preliminary Injunctions and Damage Rules in Patent Law," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 385-405, June.
    11. Choi, Jay Pil, 1998. "Patent Litigation as an Information-Transmission Mechanism," American Economic Review, American Economic Association, vol. 88(5), pages 1249-1263, December.
    12. Michael J. Meurer, 1989. "The Settlement of Patent Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 77-91, Spring.
    13. Hugh C. Briggs III & Kathleen D. Huryn & Mark E. McBride, 1996. "Treble Damages and the Incentive to Sue and Settle," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 770-786, Winter.
    14. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew F. Daughety & Reinganum F. Reinganum, 2014. "Settlement and Trial: Selected Analyses of the Bargaining Environment," Vanderbilt University Department of Economics Working Papers 14-00005, Vanderbilt University Department of Economics.
    2. Shaun Larcom & Mare Sarr, 2018. "On the Perils of Commitment to Punishment when Criminals Are Strategic," The Journal of Legal Studies, University of Chicago Press, vol. 47(2), pages 391-418.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 315-380, Elsevier.
    2. Hong Luo & Julie Holland Mortimer, 2017. "Copyright Enforcement: Evidence from Two Field Experiments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(2), pages 499-528, June.
    3. He, Leshui, 2020. "A theory of pre-filing settlement and patent assertion entities," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    4. Rasmus Arler Bogetoft & Peter Bogetoft, 2022. "Market entrance, patents, and preliminary injunctions: a model of pharmaceutical patent litigation," European Journal of Law and Economics, Springer, vol. 53(3), pages 379-423, June.
    5. Bar, Talia & Kalinowski, Jesse, 2019. "Patent validity and the timing of settlements," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    6. Bogdan Genchev & Julie Holland Mortimer, 2016. "Empirical Evidence on Conditional Pricing Practices," NBER Working Papers 22313, National Bureau of Economic Research, Inc.
    7. Schankerman, Mark & Schuett, Florian, 2016. "Screening for Patent Quality," CEPR Discussion Papers 11688, C.E.P.R. Discussion Papers.
    8. Andreas Panagopoulos & In-Uck Park, 2008. "Patent Protection, Takeovers, and Startup Innovation: A Dynamic Approach," The Centre for Market and Public Organisation 08/201, The Centre for Market and Public Organisation, University of Bristol, UK.
    9. Deepak Somaya & Christine A. McDaniel, 2012. "Tribunal Specialization and Institutional Targeting in Patent Enforcement," Organization Science, INFORMS, vol. 23(3), pages 869-887, June.
    10. Schankerman, Mark & Schütt, Florian, 2016. "Screening for Patent Quality : Examination, Fees, and the Courts," Discussion Paper 2016-046, Tilburg University, Center for Economic Research.
    11. Bruno Deffains & Claude Fluet, 2013. "Legal Liability when Individuals Have Moral Concerns," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(4), pages 930-955, August.
    12. Cosnita-Langlais, Andreea & Tropeano, Jean-Philippe, 2022. "Learning by litigating: An application to antitrust commitments," International Journal of Industrial Organization, Elsevier, vol. 80(C).
    13. Gerard Llobet & Jorge Padilla, 2023. "A theory of socially inefficient patent holdout," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(2), pages 424-449, April.
    14. Matthias Kräkel, 2010. "Double-Sided Moral Hazard, Efficiency Wages, and Litigation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 26(2), pages 337-364.
    15. Alberto Galasso & Mark Schankerman, 2010. "Patent thickets, courts, and the market for innovation," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 472-503, September.
    16. Bertrand Chopard & Thomas Cortade & Eric Langlais, 2013. "Damage rules and the patent hold-up problem : An analysis of Article L. 615-7," EconomiX Working Papers 2013-37, University of Paris Nanterre, EconomiX.
    17. Maria Antonelli & Veronica Grembi, 2013. "A microeconomic model of the demand of civil justice: is one institutional context better than another?," European Journal of Law and Economics, Springer, vol. 36(2), pages 295-318, October.
    18. Sylvain Bourjade & Patrick Rey & Paul Seabright, 2009. "Private Antitrust Enforcement In The Presence Of Pre‐Trial Bargaining," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 372-409, September.
    19. Erik Hovenkamp & Jorge Lemus, 2022. "Antitrust Limits on Patent Settlements: A New Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 70(2), pages 257-293, June.
    20. Heikkilä, Jussi & Peltoniemi, Mirva, 2019. "Great expectations: Learning the boundaries of design rights," Research Policy, Elsevier, vol. 48(9), pages 1-1.

    More about this item

    Keywords

    preliminary injunction; learning; signaling; screening; litigation; pre-trial motion; settlement;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • L4 - Industrial Organization - - Antitrust Issues and Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:doj:eagpap:201102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tung Vu (email available below). General contact details of provider: https://edirc.repec.org/data/atrgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.