What's wrong with the patent system? Fuzzy boundaries and the patent tax

First Monday

Volumn 12, Issue 6, 2007, Pages

  Bessen, James ^a,b   Meurer, Michael J ^b,c  

^a Research on Innovation   (United States)

^b BOSTON UNIVERSITY   (United States)

^c Department of Law ^*

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EID: 34547343529     PISSN: 13960466     EISSN: None     Source Type: Journal    
DOI: 10.5210/fm.v12i6.1867     Document Type: Conference Paper

References (10)

1. This article is based on parts of our forthcoming book Do Patents Work? (http:// researchoninnovation.org/dopatentswork/).
2. Part of this increase results from an increase in the average number of patents involved in each lawsuit, but the trend is upward even after adjusting for this increase. Also, the increasing numbers of patents per lawsuit suggests that the increase in patenting is more than just an increase in the number of inventions.
3. Notice that although the latest reported patent issue date is 2000, this graph depicts the effect of litigation up through the year 2004. The figure uses a four-year window because lawsuits are more likely to be filed during the first few years after issue than during later years. Also, note that this time pattern of lawsuit filings appears to be stable over our sample period.
4. The probability of lawsuits per patent determines the effective cost of enforcing a patent. An increase in this probability makes patents more costly to enforce and therefore less valuable to innovators. Lawsuits per R&D reflect the cost to innovators of the risk of having to defend a patent infringement lawsuit.
5. For example, contract lawsuits in federal court which usually feature businesses as both plaintiff and defendant have trended down between 1990 and 2004.
6. We find that from 1984-1989, 24 percent of the lawsuits filed involved patents that had been awarded to individuals; from 1990-1999, the comparable figure was 22 percent. Similarly, of the lawsuits against public firms, 29 percent were filed by other public firms during the 1980s; during the 1990s, 31 percent were filed by other public firms.
7. Bronwyn H. Hall and Rosemary Ham Ziedonis, 2007. "An Empirical Analysis of Patent Litigation in the Semiconductor Industry," working paper, at http://elsa.berkeley.edu/ bhhall/papers/ HallZiedonis07_PatentLitigation_AEA.pdf.
8. Josh Lerner, 2006. "Trolls on State Street? The Litigation of Financial Patents, 1976-2005," working paper, at http://www.people.hbs. edu/jlerner/Trolls.pdf.
9. lain M. Cockburn and Rebecca Henderson, 2003. "The IPO Survey on Strategic Management of Intellectual Property," Intellectual Property Owners Association, Washington, D.C. (November); survey overview and results available at Association's Web site at http://www.ipo.org.
10. The specific nature of the pharmaceutical industry may also play a role, but we find that inorganic chemicals also have low litigation rates, while biotech patents that are not simple chemical entities have high litigation rates.