Stylised Fact of Patent Litigation: Value, Scope and Ownership

This paper investigates the characteristics of litigated patents by combining for the first time information about patent case filings from the U.S. district courts and detailed data from the U.S. Patents and Trademark Office. A series of indicators is constructed for the factors which the theoretical literature suggests contribute to litigation: the frequency of disputes, the size and asymmetry of stakes, the structure of information, and costs. Compared to a random sample of U.S. patents from the same cohorts and technology areas, it is found that more valuable patents and those with domestic owners are considerably more likely to be involved in litigation. Patents owned by individuals are at least as likely to be the subject of a case as corporate patents, and litigation is frequently in new technology areas. The results are interpreted with reference to theoretical models of litigation and settlement and the effects of patent litigation on the incentive to invest in R&D is discussed.