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The Litigation of Financial Innovations

  • Josh Lerner

This paper examines the litigation of patents relating to financial products and services. I show that these grants are being litigated at a rate 27 to 39 times greater than that of patents as a whole. The patents being litigated are disproportionately those issued to individuals and to smaller, private entities, as well as those whose features may proxy for higher quality. Larger entities are disproportionately targeted in litigation. I discuss how the findings are in large part consistent with the theoretical literature on the economics of litigation.

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File URL: http://www.nber.org/papers/w14324.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14324.

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Date of creation: Sep 2008
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Publication status: published as Josh Lerner, 2010. "The Litigation of Financial Innovations," Journal of Law and Economics, University of Chicago Press, vol. 53(4), pages 807 - 831.
Handle: RePEc:nbr:nberwo:14324
Note: CF PR
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  1. Miller, Merton H., 1986. "Financial Innovation: The Last Twenty Years and the Next," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 21(04), pages 459-471, December.
  2. Lanjouw, Jean O & Pakes, Ariel & Putnam, Jonathan, 1998. "How to Count Patents and Value Intellectual Property: The Uses of Patent Renewal and Application Data," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 405-32, December.
  3. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-51, Spring.
  4. 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.
  5. Tufano, Peter, 1989. "Financial innovation and first-mover advantages," Journal of Financial Economics, Elsevier, vol. 25(2), pages 213-240, December.
  6. Jean O. Lanjouw & Ariel Pakes & Jonathan Putnam, 1996. "How to Count Patents and Value Intellectual Property: Uses of Patent Renewal and Application Data," NBER Working Papers 5741, National Bureau of Economic Research, Inc.
  7. Rosenberg, D. & Shavell, S., 1985. "A model in which suits are brought for their nuisance value," International Review of Law and Economics, Elsevier, vol. 5(1), pages 3-13, June.
  8. Lerner, Josh, 2006. "The new new financial thing: The origins of financial innovations," Journal of Financial Economics, Elsevier, vol. 79(2), pages 223-255, February.
  9. Josh Lerner, 2004. "Where Does State Street Lead? First Look at Finance Patents, 1971-2000," Levine's Working Paper Archive 122247000000000497, David K. Levine.
  10. Lucian Arye Bebchuk, 1987. "Suing Solely to Extract a Settlement Offer," NBER Working Papers 2161, National Bureau of Economic Research, Inc.
  11. Lerner, Josh, 1995. "Patenting in the Shadow of Competitors," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 463-95, October.
  12. Robert C. Merton, 1992. "Financial Innovation And Economic Performance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 4(4), pages 12-22.
  13. 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.
  14. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
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