The Patent Litigation Explosion

401 The Patent Litigation Explosion James Bessen and Michael J. Meurer * This Article provides the first look at patent litigation hazards for public firms during the 1980s and 1990s. Litigation is more likely when prospective plaintiffs acquire more patents, when firms are larger and technologically close and when prospective defendants spend more on research and development (“R&D”). The latter suggests inadvertent infringement may be more important than piracy. Public firms face dramatically increased hazards of litigation as plaintiffs and even more rapidly increasing hazards as defendants, especially for small public firms. The increase cannot be explained by patenting rates, R&D, firm value or industry composition. Legal changes are the most likely explanation. TABLE OF CONTENTS INTRODUCTION .................................................................................... 402 I. MODEL AND SPECIFICATION .......................................................... 406 A. Dispute, Filing and Settlement ............................................... 406 B. Specification ........................................................................... 408 II. DATA DESCRIPTION ....................................................................... 409 A. Data Sources .......................................................................... 409 B. Variables ................................................................................ 412 C. Characteristics of the Samples ............................................... 414 III. EMPIRICAL RESULTS ...................................................................... 416 A. Basic Measures of Litigation Hazard..................................... 416 B. What Difference do Industry and Technological Closeness Make? ..................................................................................... 418 * Research on Innovation and Boston University School of Law, and Boston University School of Law, respectively. Thanks to Iain Cockburn, Bronwyn Hall, Jay Kesan, Zorina Khan, Jenny Lanjouw, Josh Lerner, Glynn Lunney Jr., Mark Schankerman, John Turner and participants in seminars at the ALEA, BU, the IIOC, NBER and Napa for helpful comments. Thanks to Annette Fratantaro, Bob Hunt, Megan MacGarvie and Rosemarie Ziedonis for sharing data. Thanks to Debbie Koker for research assistance. Contact: [email protected].

The Patent Litigation Explosion

Others