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Patent litigation has been rising rapidly in the United States since the mid-1980s, and particularly so in high-technology industries. The strategies pursued by firms with their patents have a significant influence on their decisions to file suit, and on the outcomes within litigation. The influence of strategic motivations on settlement outcomes is studied in two illustratively different industries – computers and research medicines. Evidence is found for two types of influences – the use of patents (as isolating mechanisms) to protect valuable strategic stakes, and their “defensive” role in obtaining access to external technologies (through mutual hold-up).

This paper proposes that patents are real options that allow holders of patents the right but not the obligation to sue others. We suggest that the likelihood of a patent being litigated is positively associated with value of the patent and the extent of disclosure (prior art cited) in the patent. However, under conditions of greater value, increases in disclosure reduce the likelihood of litigation of the focal patent. Similarly, under conditions of greater disclosure, increases in value reduce the likelihood of litigation of the focal patent. Rare events logit analyses of business method patents that were litigated, compared to patents that were not litigated, offer empirical evidence supporting the hypotheses.

The Supreme Court’s decision in Federal Trade Commission v. Actavis, Inc. is a challenge to conventional antitrust analysis. Conventional civil antitrust cases are decided by a preponderance of the evidence. This means that conduct challenged under the rule of reason is only condemned if the conduct resulted in more competitive harm in the actual world than a world without the alleged violation. Under conventional analysis, the intent of the parties also plays only a supporting role in determining whether the conduct was anticompetitive. A holder of a valid patent has a right to exclude others practicing the patented technology. And, the patent holder is not assumed to have market power because it expended resources in maintaining exclusionary rights. Actavis creates doubts about these propositions in circumstances beyond the “reverse” payment settlement of a patent suit that may have delayed an alleged infringer market entry. This chapter explores whether applying Actavis logic to antitrust litigation can result in condemnation of practices where there is little chance of an anticompetitive effect, where the patent holder likely has a valid and infringed patent, where there is little reason to believe that the patent holder has market power, and where only one party, or no parties, to an agreement have an anticompetitive intent. This chapter also investigates whether Actavis creates new problems with standing analysis, damages calculations, and the balancing of efficiencies against anticompetitive effects. Nevertheless, the lower courts have begun to extend the logic of Actavis. This is apparent in the condemnation of no-Authorized-generic settlements.

Patent litigation consists of non-market actions that firms undertake to access intellectual property rights defined by prior legislation and enforced by the courts. Thus, patent litigation provides an interesting context in which to explore aspects of firm’s non-market strategies. In contrast with prior non-market strategy research that has largely focused on how political institutions define the rules of the game for market competition, non-market actions within patent litigation primarily seek to access and apply these broad policies to specific situations, products, or assets that matter to the firm. Furthermore, because such non-market actions are directly influenced by the firms’ market strategies, they represent a promising area for research on integrated (market and non-market) strategies as well.

The goal of this paper is to explain how generic patent strategies that firms use to support their competitive advantage in the product-market influence non-market outcomes related to the timing of patent litigation resolution. In contrast with prior research that has studied settlement in patent litigation essentially as a one-shot bargaining game, this paper seeks to explain litigation resolution as an outcome of the competing mechanisms of settlement and adjudication that operate continually during litigation. Using a large sample of patent litigations in research medicines and computers, I model the timing of patent litigation resolution in a proportional hazards framework, wherein settlement and adjudication are competing risks. The evidence found is consistent with the proposition that the speed with which patent litigation is resolved by either settlement or adjudication reflects the use of proprietary, defensive, and leveraging patent strategies by firms. These findings also help to explain unexpected and anomalous findings regarding the settlement of patent litigation reported in prior research.

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.

Globalization should provide firms with an opportunity to leverage their know-how and reputation across countries to create value. However, it remains challenging for them to actually capture that value using traditional Intellectual Property (IP) tools. In this paper, we document the strong growth in patents, trademarks, and industrial designs used by firms to protect their IP globally. We then show that IP protection remains fragmented; the quality of IP applications might be questionable; and developing a comprehensive IP footprint worldwide is very costly. Growing numbers of applications are causing backlogs and delays in numerous Patent and Trademarks Offices and litigation over IP rights is expensive, with an uncertain outcome. Moreover, local governments can succeed in transferring value to local firms and influencing global market positions by using IP laws and other regulations. In essence, the analysis shows a global IP environment that leaves much to be desired. Despite these challenges, there are successful strategies to capture value from know-how and reputation by leveraging an array of IP tools. These strategies have important implications for management practice, as we discuss in our concluding section. Global companies will need to organize cross-functional value capture teams focused on appropriating value from their know-how and reputation by combining different institutional, market, and nonmarket tools, depending on the institutional and business environment in a particular region.

We study how different rules for allocating litigation costs impact on royalty negotiation when a non-practicing patent holder asserts its patent against a product developer.

A theoretical framework is proposed which distinguishes between three legal-cost allocation systems: the American system, where each party bears its own costs; the British system, where the loser incurs all costs; and the system favoring the defendant, where the defendant pays its own costs if it loses and nothing otherwise. The model considers both flat lawyer fees and contingency fees.

We first determine conditions under which, in the assumed contexts, the American system is preferable to the British one. Successively, we show that the less usual system favoring the defendant proves to be an interesting alternative.

In this way, in addition to extend the standard model of patent holdup, we furnish an analytical treatment of recent legislative proposals, such as the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act of 2013.

The article examines strategically directing the breadth of scope of a patent and hazards of litigation vis-à-vis the length of claims for innovating firms.

This paper enumerates latest literature on assessing patent scope and hence protection afforded to firm innovations. Based on prior research findings, this paper proposes to maintain a balanced and nuanced approach to claim drafting to assure grant of patent while minimizing litigation threats.

To strategically manage patent grant and minimize litigation threat, firms would better take a leaf out of academic discourse and streamline claim drafting – not too wide to earn an examiner’s ire and not too narrow to let an infringer bypass by. Unlike smaller firms or universities, big firms are less likely to renew a patent with less scope.

The study sample in contemporary literature is exclusive to patents from US Patent and Trademark Office. Whether the same result will be replicated for diverse countries is uncertain.

The understanding that patent scope not only influences grant chances but also is an indicator of future litigation threat can help patent practitioners and innovating firms in strategically directing the patent.

The paper draws from the findings of three well-articulated recent research papers. The paper’s originality and value is in providing practical insights on how to perfect patent scope in a real world based on academic discourse.

This chapter examines the role of “continuations” (procedural revisions of patent applications) within software patents and overall patenting in the United States during 1987–1999. Our research represents the first effort of which we are aware to analyse data on continuations in software or any other patent class, and as such provides information on the effects of 1995 changes in the U.S. patent law intended to curb “submarine patenting.” Our analysis of all U.S. patents issued 1987–1999 shows that the use of continuations grew steadily in overall U.S. patenting through 1995, with particularly rapid growth in continuations in software patenting. Sharp reversals in these growth rates after 1995 suggest that changes in the U.S. patent law were effective. Continuations were used more intensively by packaged-software firms prior to the effective date of the 1995 changes in patent law than by other patentees, and both software and non-software patents subject to continuation tend to be more valuable.

The purpose of this paper is to examine the impact of common ownership on corporate innovation, including innovation input, innovation output and postgrant patents.

This paper uses the ordinary least square model and the difference-in-differences technique to evaluate the effect of institutional interlocking shareholdings on the life cycle of corporate innovation.

The results show that common ownership impedes innovation measured by patent grants and citations through reduced R&D expenditures. However, common ownership protects postgrant patents by lowering the likelihood that a co-owned firm gets involved in patent litigation and by accelerating the settlement of lawsuits between co-owned firms.

From a regulatory perspective, common ownership in younger firms that rely heavily on R&D investment to produce innovation outputs is detrimental and needs to be regulated. However, common ownership in mature firms, which hold a big pool of patents or rely on acquiring patents to compete, is of less concern because of the protective role detected.

The paper provides a first comprehensive look into how same-industry common ownership affects innovation input, innovation output and postgrant patents. The research also reconciles the anticompetitive effect and the coordinative effect of common ownership documented in the literature.