Licensing vs. Litigation: The Effect of the Legal System on Incentives to Innovate

[[abstract]]With uncertain scope of patent protection and imperfect enforcement, the effective strength of patent protection is determined by the legal system. We analyze how the legal system affects the incentives of firms to innovate, taking into account possibilities of strategic licensing and litigation to deter imitation. The legal system that guarantees the patentee's monopoly power maximizes the R&D intensities. However, the legal system that induces licensing provides incentives to exert R&D effort while preserving ex post efficiency. We also compare R&D, patent licensing, and litigation behavior under American and English rules of legal cost allocation.[[notice]]補正完畢[[journaltype]]國外[[booktype]]紙本[[countrycodes]]US

Patent Litigation Strategy and Its Effects on the Firm

Patent litigation has attracted scholarly attention to reconcile multiple views for new research. Accordingly, this paper addresses patent litigation strategy and its effect on the firm. Based on 106 papers and articles, six books, the author\u27s logic and practice impressions, it first defines patent litigation strategy and differentiates similar concepts. Second, based on the process, the author fine‐tunes patent litigation strategy into three tactics: threat, filing and verdict. Then, she categorizes and examines the impact of patent litigation on market value, monetary gain/loss and strategic collaboration. The findings show that the effect on the market value is more complex and ambiguous than anticipated, and sometimes contradictory. The analysis shows the consistency of monetary effect in practice, that firms tend to have higher monetary gains from private settlement than from legal awards. It also demonstrates that existing studies lag behind reality in investigating the detailed role of patent litigation on strategic collaboration from partnership (e.g. licensing and strategic alliance) to takeover (i.e. merger and acquisition). Finally, the author reflects on the findings, and maps out critical paths toward new research. This process also reveals that stakeholders, industrial settings and country environments moderate the studied relationship. This paper contributes to knowledge and practice: appreciates the interdisciplinary endeavors to draw the findings; categorizes patent litigation and its effect; and critiques prior studies on the relationship to integrate knowledge for future research