TY - UNPB

T1 - Financing Patent Litigation through Market Entrance

AU - Bogetoft, Rasmus Arler

PY - 2021

Y1 - 2021

N2 - We propose a model of patent litigation where a potential competitor - the Entrant - can challenge a patent with and without entering the market before a final court decision. We study the settings (the Financing Space) where market entrance is used to finance patent litigation, i.e. where the Entrant would not have challenged the patent's validity, had she not been able to enter the market. This space increases in the Entrant's litigation costs, but decreases in the Patent Holder's litigation costs and as the court becomes better at calculating the size of damages to the Patent Holder. When the value of future access to the market increases, the size of the Financing Space decreases. And, with some constraints, the Financing Space increases with the likelihood of the patent being valid. Finally, market entrance may also finance the Patent Holder's litigation costs, such that he litigates in settings where he would not have, if the Entrant had not entered. As such, entrance can be a double edged sword.Our insights have implications for how attorneys should advise their clients on strategy and how policy makers should amend the patent litigation system to fulfill their goals.

AB - We propose a model of patent litigation where a potential competitor - the Entrant - can challenge a patent with and without entering the market before a final court decision. We study the settings (the Financing Space) where market entrance is used to finance patent litigation, i.e. where the Entrant would not have challenged the patent's validity, had she not been able to enter the market. This space increases in the Entrant's litigation costs, but decreases in the Patent Holder's litigation costs and as the court becomes better at calculating the size of damages to the Patent Holder. When the value of future access to the market increases, the size of the Financing Space decreases. And, with some constraints, the Financing Space increases with the likelihood of the patent being valid. Finally, market entrance may also finance the Patent Holder's litigation costs, such that he litigates in settings where he would not have, if the Entrant had not entered. As such, entrance can be a double edged sword.Our insights have implications for how attorneys should advise their clients on strategy and how policy makers should amend the patent litigation system to fulfill their goals.

M3 - Working paper

VL - 21

SP - 1

EP - 35

BT - Financing Patent Litigation through Market Entrance

PB - CBS Law Working Paper Series

CY - SSRN

ER -