Antitrust Limits on Patent Settlements: A New Approach

Erik Hovenkamp, Jorge Lemus

Research output: Contribution to journalArticlepeer-review


Patent settlements between rivals restrain competition in many different ways. Antitrust requires that their anticompetitive effects are reasonably commensurate with the firms’ expectations about (counterfactual) patent litigation. Because these expectations are private and non-verifiable, this standard is hard to administer; to date, it has been successfully applied only within a very narrow class of agreements. We show that it can be applied universally by policing the economic structure of the firms’ contract. This approach determines whether settlement outcomes will be antitrust-compliant for any private beliefs the firms might have, thus avoiding the need to speculate about such beliefs.
Original languageEnglish (US)
Pages (from-to)257-293
Number of pages37
JournalJournal of Industrial Economics
Issue number2
StatePublished - Jun 2022


  • Antitrust
  • collusion
  • horizontal restraints
  • litigation
  • patents
  • pay-for-delay
  • robust design
  • settlements

ASJC Scopus subject areas

  • Accounting
  • General Business, Management and Accounting
  • Economics and Econometrics


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