Abstract: In this study, we use carefully constructed matched samples of litigated and non-litigated patents to investigate the characteristics that predict litigation. Survival time regressions allow us to demonstrate the separate impacts of value and uncertainty on litigation. In particular, standard essential patents are more likely to be litigated than non-SEPs. However, the earlier the disclosure is made, the lower the hazard of litigation. That is, when information is provided early to the market, uncertainty is reduced and the hazard of litigation is lower. Similarly, the total number of lifetime patent citations is positively correlated with litigation (the value effect); however, if those citations are received early in a patent’s life, the informational content reduces uncertainty and consequently the litigation rate. These findings reconcile some inconsistent results in the empirical literature.
Read the paper: Patent Value and Uncertain Property Rights: Implications from Patent Litigation