A Cooperative Game Approach to Patent Litigation, Settlement, and Allocation of Legal Costs

Reiko Aoki and Jin Hu

No 216, Working Papers from Department of Economics, The University of Auckland

Abstract: We analyze litigation and settlement behavior in case of patent infringement using the Nash Bargaining Game framework. We show that litigation can be the Pareto efficient outcome. We also show that when there is settlement, the transfer payment from the defendant to the plaintiff is increasing in its own legal cost and decreasing in that of the plaintiff, reflecting the bargaining power on both sides. We also compare the American and English rules of cost allocation when legal costs are endogenously determined.

Keywords: Economics (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (7)

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