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Involvement in patent litigation creates substantial direct and indirect costs for firms. We present evidence that pairs of firms involved in patent litigation are more evenly-matched in financial profiles than pairs of firms not involved in litigation. We take advantage of a novel, hand-collected data set that combines data on observed instances of patent litigation with product-level data to form dyadic plaintiffs-defendant pairs at risk of litigation in the semiconductor industry from 1984 to 2000. Product-level data for more than 200,000 semiconductor devices coupled with firm patent data allows us to construct fine-grained controls for risk of litigation between pairs of potential litigants. We consider several variables associated with a firm's cost of capital: 1) the Whited and Wu (2006) index for financing constraints, 2) analyst coverage, and 3) institutional ownership concentration. We find evidence that, controlling for technological and product overlap, pairs of firms involved in litigation are more similar in terms of financing constraint, analyst coverage, and institutional ownership concentration than pairs of firms not involved in litigation.
Cost of Capital in Litigation addresses cost of capital issues in litigation and discusses major decisions, highlighting how to avoid errors that have often been made by experts. The book helps the attorney and valuation expert understand the decisions within the context of the theory of cost of capital and includes a chapter on cross-examining experts on cost of capital issues. Throughout, there are citation to relevant material and cross-reference to Cost of Capital: Applications and Examples, Fourth Edition.
A practical resource for valuing patents that is accessible to the complete spectrum of decision makers in the patent process In today's economy, patents tend to be the most important of the intellectual property (IP) assets. It is often the ability to create, manage, defend, and extract value from patents that can distinguish competitive success and significant wealth creation from competitive failure and economic waste. Patent Valuation enhances the utility and value of patents by providing IP managers, IP creators, attorneys, and government officials with a useable resource that allows them to use actual or implied valuations when making patent-related decisions. Involves a combination of techniques for describing patent valuation Includes descriptions of various topics, illustrative cases, step-by-step valuation techniques, user-friendly procedures and checklists, and examples Serves as a useable resource that allows IP managers to use actual or implied valuations when making patent-related decisions One of the most fundamental premises of the book is that these valuation skills can be made accessible to each of the various decision makers in the patent process. Patent Valuation involves narrative descriptions of the various topics, illustrative cases, step-by-step valuation techniques, user-friendly procedures and checklists, and an abundance of examples to demonstrate the more complex concepts.
An easy-to-understand explanation of a complex subject which is often beyond the scope of most attorneys' expertise. Focuses on quantifying lost profits and reasonable royalties. Cites established methods of calculating damages for patents, trademarks and copyrights. Describes how to use formal damages reports and offers detailed analyses of landmark infringement cases. Includes accessible checklists, sample calculations and practical tips. Supplemented annually.
Recent studies estimate that the economic impact of U.S. patent litigation may be as large as $80 billion per year and that the overall rate of U.S. patent litigation has been growing rapidly over the past twenty years. And yet, the relationship of the macroeconomy to patent litigation rates has never been studied in any rigorous fashion. This lacuna is notable given that there are two opposing theories among lawyers regarding the effect of economic downturns on patent litigation. One camp argues for a substitution theory, holding that patent litigation should increase in a downturn because potential plaintiffs have a greater incentive to exploit patent assets relative to other investments. The other camp posits a capital constraint theory that holds that the decrease in cash flow and available capital disincentivizes litigation. Analyzing quarterly patent infringement suit filing data from 1971-2009 using a time-series vector autoregression (VAR) model, we show that economic downturns have significantly affected patent litigation rates. (To aid other researchers in testing and extending our analyses, we have made our entire dataset available online.) Importantly, we find that these effects have changed over time. In particular, patent litigation has become more dependent on credit availability in a downturn. We hypothesize that such changes resulted from an increase in use of contingent-fee attorneys by patent plaintiffs and the rise of non-practicing entities (NPEs), which unlike most operating companies, generally fund their lawsuits directly from outside capital sources. Over roughly the last twenty years, we find that macroeconomic conditions have affected patent litigation in contrasting ways. Decreases in GDP (particularly economy-wide investment) are correlated with significant increases in patent litigation and countercyclical economic trends. On the other hand, increases in T-bill and real interest rates as well as increases in economy-wide financial risk are generally correlated with significant decreases in patent suits, leading to procyclical trends. Thus, the specific nature of a downturn predicts whether patent litigation rates will tend to rise or fall.
Through a collaboration among twenty legal scholars from North America, Europe and Asia, this book presents an international consensus on the use of patent remedies for complex products such as smartphones, computer networks, and the Internet of Things. This title is also available as Open Access on Cambridge Core.
This volume assembles papers commissioned by the National Research Council's Board on Science, Technology, and Economic Policy (STEP) to inform judgments about the significant institutional and policy changes in the patent system made over the past two decades. The chapters fall into three areas. The first four chapters consider the determinants and effects of changes in patent "quality." Quality refers to whether patents issued by the U.S. Patent and Trademark Office (USPTO) meet the statutory standards of patentability, including novelty, nonobviousness, and utility. The fifth and sixth chapters consider the growth in patent litigation, which may itself be a function of changes in the quality of contested patents. The final three chapters explore controversies associated with the extension of patents into new domains of technology, including biomedicine, software, and business methods.
This paper estimates the total cost of patent litigation to alleged infringers. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. We find that the total costs of litigation are much greater than legal fees and costs are large even for lawsuits that settle. Lawsuits cost alleged infringers about $28.7 million ($92) in the mean and $2.9 million in the median. Moreover, infringement risk rose sharply during the late 1990s to over 14% of R&D spending. Small firms have lower risk relative to R&D.
United States patent litigation is complex, lengthy and expensive. It can be daunting for both those unaccustomed to litigation, as well as large domestic corporations experienced in filing and defending lawsuits. This guide provides the reader with a better understanding of the US judicial process, particularly as it applies to patent law, including sections on the US court system, its rules and its procedures, and the time and cost involved in US patent litigation. For patent litigants, the guide will provide a better understanding of an attorney's role in the process and where expenses are generated, which will allow them to make more informed business decisions related to litigation.