Patent Defense Financing∗
نویسندگان
چکیده
The protection that innovators obtain from patenting their inventions crucially depends on their incentives and ability to defend them from infringers. We study how the financing of legal costs can alter the incentives to litigate in defense of the patent and, thus, the prospects of infringement and the effective protection of the innovation. We compare the resort to a financier once the infringement has occurred (ex-post financing) with patent litigation insurance (PLI). In its basic form, PLI provides a stronger commitment to litigate, which may have a deterrence effect on the potential infringer, but has the cost of inducing excessive litigation, so its dominance over ex-post financing is not general. We show, however, that, adding an appropriate deductible, PLI can implement the innovator’s second-best outcome: patent predation by deeppocketed competitors can be prevented without the cost of excessive litigation. ∗Address for correspondence: CEMFI, Casado del Alisal 5, 28014 Madrid, Spain. Tel: +34914290551. Fax: +34-914291056. Email: [email protected], [email protected]. †We thank Andres Almazan, Dima Leshchinskii, Rafael Repullo, Ibolya Schindele, the participants at the 6th Bundesbank Spring Conference on Financing Innovation, and the seminar audience at CEMFI for their comments. Financial support from European Commission grant HPSE-CT2002-00140 is gratefully acknowledged.
منابع مشابه
To Be Financed or Not - The Role of Patents for Venture Capital Financing
This paper investigates how patents held by new ventures affect their ability to attract venture capital (VC) financing. For a sample of VCseeking German and British biotechnology companies we have identified all patents filed at the European Patent Office. We find that in the presence of patent applications, VC financing occurs earlier. Our results suggest that VCs pay attention to patent qual...
متن کاملThe Role of Patents for Venture Capital Financing
This paper investigates how patent applications and grants held by new ventures improve their ability to attract venture capital (VC) financing. We argue that investors are faced with considerable uncertainty and therefore rely on patents as signals when trying to assess the prospects of potential portfolio companies. For a sample of VC-seeking German and British biotechnology companies we have...
متن کاملGOLIATH PATENT CASES : A SEARCH FOR THE MOST PRACTICAL MECHANISM OF THIRD PARTY LITIGATION FINANCING FOR SMALL PLAINTIFFS Bruce
متن کامل
Patents as Quality Signals? The Implications for Financing Constraints on R&D*
Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on th...
متن کاملSelling Innovation in Bankruptcy∗
We construct a comprehensive dataset of patent sales conducted by all US public firms in Chapter 11 bankruptcy from 1981 to 2012. We document that 40% of firms sell, on average, 18% of their patents during bankruptcy reorganizations. Innovation sales concentrate in the first two quarters after bankruptcy filing. Firms sell more redeployable and liquid patents, as opposed to selling underexploit...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
دوره شماره
صفحات -
تاریخ انتشار 2004