Proprietary costs and sealing documents in patent litigation

Richard Frankel (), Joshua Lee () and Zawadi Lemayian ()
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Richard Frankel: Washington University in St. Louis
Joshua Lee: University of Georgia
Zawadi Lemayian: Washington University in St. Louis

Review of Accounting Studies, 2018, vol. 23, issue 2, No 3, 452-486

Abstract: Abstract We study whether the sealing of a defendant’s judicial records during a patent lawsuit filing correlates with the defendant’s level of competition and disclosure. Courts permit sealing of judicial records when competitive damage outweighs the public interest in access to documents and records. We find that defendants with sealed judicial records have higher research and development (R&D), lower industry sales concentration, and more references to competition in their annual reports than defendants without sealed judicial records. We observe faster mean reversion of return on net operating assets when courts seal defendant records. The results suggest that sealing relates to archival measures of competition. Finally, consistent with proprietary costs restraining disclosure, we find that defendants with sealed judicial records are less likely to issue management forecasts, file 8-Ks less frequently, and have longer and less readable 10-Ks.

Keywords: M41; Proprietary costs; Competition; Disclosure; Patent litigation (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11142-017-9434-y

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