Patent Thickets and the Market for Innovation:Evidence from Settlement of Patent Disputes

Alberto Galasso and Mark Schankerman

STICERD - Economics of Industry Papers from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: We study how fragmentation of patent rights ('patent thickets') and the formation of theCourt of Appeal for the Federal Circuit (CAFC) affected the duration of patent disputes, andthus the speed of technology diffusion through licensing. We develop a model of patentlitigation which predicts faster settlement agreements when patent rights are fragmented andwhen there is less uncertainty about court outcomes, as was associated with the 'pro-patentshift' of CAFC. The model also predicts that the impact of fragmentation on settlementduration should be smaller under CAFC. We confirm these predictions empirically using adataset that covers nearly all patent suits in U.S. federal district courts during the period1975-2000. Finally, we analyze how fragmentation affects total settlement delay, taking intoaccount both reduction in duration per dispute and the increase in the number of requiredpatent negotiations associated with patent thickets.

Keywords: patents; anti-commons; patent thickets; litigation; settlement. (search for similar items in EconPapers)
JEL-codes: K41 L24 O31 O34 (search for similar items in EconPapers)
Date: 2008-08
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:cep:stieip:46

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