Pay-for-delay with Follow-on Products

Jorge Lemus and Emil Temnyalov

No 2019/09, Working Paper Series from Economics Discipline Group, UTS Business School, University of Technology, Sydney

Abstract: We study pay-for-delay settlements between a patent holder and a challenger when the patent holder can introduce follow-on products. We show that ignoring follow-on products biases the inferred competitive harm of pay-for-delay settlements (the �Actavis inference�). The reason is that patent invalidation triggers an earlier introduction of follow-on products which changes pay-for-delay negotiation�s payoffs relative to the case of no follow-on products. When follow-on products are ignored, we show that an inference based on a reverse payment over-estimates patent strength. If parties cannot use payments (as in pure-delay settlements), follow-on products may push the parties to settle on an earlier entry date relative to the entry date negotiated in the absence of follow-on products, and litigation may arise in equilibrium.

Keywords: pay-for-delay; product hopping; evergreening; antitrust; litigation (search for similar items in EconPapers)
JEL-codes: D2 K2 K4 L13 L4 O3 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2019-05-01
New Economics Papers: this item is included in nep-com and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.uts.edu.au/sites/default/files/2020-06/Emil%20T%20final%20WP.pdf (application/pdf)

Related works:
Journal Article: Pay-for-Delay with Follow-On Products (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uts:ecowps:2019/09

Access Statistics for this paper

More papers in Working Paper Series from Economics Discipline Group, UTS Business School, University of Technology, Sydney PO Box 123, Broadway, NSW 2007, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Duncan Ford ().