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