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- Title
A MODEL OF PATENT TROLLS.
- Authors
Choi, Jay Pil; Gerlach, Heiko
- Abstract
This article develops a model of patent trolls to understand various litigation strategies employed by nonpracticing entities (NPEs). When an NPE faces multiple potential infringers who use related technologies, it can gain a credible threat to litigate even when it has no such credibility vis‐à‐vis any single potential infringer in isolation. This is due to an information externality generated by an early litigation outcome for subsequent litigation. Successful litigation creates an option value against future potential infringers through Bayesian updating. We discuss policy implications including legal fee shifting and the use of injunctive relief.
- Subjects
NONPRACTICING entities (Patent law); BAYESIAN analysis; INTELLECTUAL property; TECHNOLOGICAL innovations; RESEARCH &; development
- Publication
International Economic Review, 2018, Vol 59, Issue 4, p2075
- ISSN
0020-6598
- Publication type
Article
- DOI
10.1111/iere.12330