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The Private Costs of Patent Litigation

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  • James Bessen

    (Research on Innovation, Boston University School of Law)

  • Michael J. Meurer

Abstract

This paper estimates the total cost of patent litigation to alleged infringers. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. We find that the total costs of litigation are much greater than legal fees and costs are large even for lawsuits that settle. Lawsuits cost alleged infringers about $28.7 million ($92) in the mean and $2.9 million in the median. Moreover, infringement risk rose sharply during the late 1990s to over 14% of R&D spending. Small firms have lower risk relative to R&D.

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  • James Bessen & Michael J. Meurer, 2007. "The Private Costs of Patent Litigation," Working Papers 0701, Research on Innovation.
    • Handle: RePEc:roi:wpaper:0701
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    File URL: http://www.ssrn.com/abstract=983736
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    Cited by:

    1. Chondrakis, George, 2016. "Unique synergies in technology acquisitions," Research Policy, Elsevier, vol. 45(9), pages 1873-1889.
    2. Bessen, James, 2008. "The value of U.S. patents by owner and patent characteristics," Research Policy, Elsevier, vol. 37(5), pages 932-945, June.
    3. Lee, Jong-Seon & Kim, Nami & Bae, Zong-Tae, 2019. "The effects of patent litigation involving NPEs on firms’ patent strategies," Technological Forecasting and Social Change, Elsevier, vol. 149(C).
    4. Raphael Zingg & Erasmus Elsner, 2020. "Protection heterogeneity in a harmonized European patent system," European Journal of Law and Economics, Springer, vol. 50(1), pages 87-131, August.

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