The Settlement of Patent Litigation

Authors

Michael J. Meurer, Boston University School of LawFollow

Document Type

Article

Publication Date

Spring 1989

ISSN

07416261

Publisher

Wiley

Language

en-US

Abstract

In this article I develop a model to analyze patent licensing that is induced as part of a settlement agreement to avoid litigation of the issue of patent validity. The patentee possesses private information about patent validity and makes a take-it-or-leave-it settlement offer to a single potential rival. An essentially unique sequential equilibrium exists if out-of-equilibrium beliefs are restricted appropriately. The model analyzes the effect of the probability of patent invalidity, antitrust policy, and the rules of litigation-cost allocation on the probability of settlement and litigation.

Recommended Citation

Michael J. Meurer, The Settlement of Patent Litigation , 20 The RAND Journal of Economics 77 (1989).
Available at: https://doi.org/10.2307/2555652