SETTLING THE CONTROVERSY OVER PATENT SETTLEMENTS: PAYMENTS BY THE PATENT HOLDER SHOULD BE PER SE ILLEGAL

Abstract

Under the patent system created by Congress a patent enjoys only a rebuttable presumption of validity. The resulting probability of invalidity has an economic value. The incentive for a challenger to capture that value creates consumer benefit. In contrast, a payment by the patent holder to the challenger to recognize validity changes the congressionally mandated rebuttable presumption into a conclusive presumption. When a patent holder enlarges the reward granted to him by Congress, by paying a potential rival to confess validity, he reduces efficiency and consumer welfare and, therefore, commits a per se violation of the antitrust laws.

Citation

Leffler, C. and Leffler, K. (2004), "SETTLING THE CONTROVERSY OVER PATENT SETTLEMENTS: PAYMENTS BY THE PATENT HOLDER SHOULD BE PER SE ILLEGAL", Kirkwood, J.B. (Ed.) Antitrust Law and Economics (Research in Law and Economics, Vol. 21), Emerald Group Publishing Limited, Leeds, pp. 475-504. https://doi.org/10.1016/S0193-5895(04)21010-7