Effects of patent privateering on settlements and R&D under sequential market entry

Felix B. Klapper and Christian Siemering

Information Economics and Policy, 2024, vol. 66, issue C

Abstract: We investigate patent litigation, settlements and R&D incentives on a market where two firms develop technologies in order to obtain patents and produce goods. Firms may sell IP rights to a Patent Assertion Entity (PAE) that acts as intermediary for patent monetization. We find that compared to simultaneous market entry, the effect of this so-called patent privateering is mitigated if firms enter sequentially. Furthermore, we show that privateering may decrease industry profits by distortion of R&D incentives even when there is no rent extraction by the PAE.

Keywords: Intellectual property rights; Patent assertion entities; Patent licensing; R&D; Innovation; Sequential entry (search for similar items in EconPapers)
JEL-codes: D2 K2 K4 L13 L4 O3 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:66:y:2024:i:c:s0167624524000027

DOI: 10.1016/j.infoecopol.2024.101080

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