The Effect of Patent Litigation Insurance: Theory and Evidence From NPEs

Bernhard Ganglmair (), Christian Helmers () and Brian J. Love ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We analyze the extent to which private defensive litigation insurance deters patent assertion by non-practicing entities (NPEs). We study the effect that a patent-specific defensive insurance product, offered by a leading litigation insurer, had on the litigation behavior of insured patents' owners, all of which are NPEs. We first model the impact of defensive litigation insurance on the behavior of patent enforcers and accused infringers. We show that the availability of defensive litigation insurance can have an effect on how often patent enforcers will assert their patents. We confirm this result empirically showing that the insurance policy had a large, negative effect on the likelihood that a patent included in the policy was subsequently asserted relative to other patents held by the same NPEs and relative to patents held by other NPEs with portfolios that were entirely excluded from the insurance product. Our findings suggest that market-based mechanisms can deter so-called "patent trolling."

Keywords: NPEs; patents; insurance; litigation (search for similar items in EconPapers)
JEL-codes: G22 K41 O34 (search for similar items in EconPapers)
Pages: 58
Date: 2020-07
New Economics Papers: this item is included in nep-ias, nep-ipr and nep-law
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The Effect of Patent Litigation Insurance: Theory and Evidence from NPEs (2022)
Working Paper: The effect of patent litigation insurance: Theory and evidence from NPEs (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2020_196

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