Abstract
Original language | English (US) |
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Number of pages | 37 |
DOIs | |
State | Published - Aug 30 2017 |
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Keywords
- Patents
- Antitrust
- Patent Settlements
- Innovation
- Licensing
- Horizontal Restraints
- Validity
- Patent Quality
- Reverse Payment
- Pay for Delay
- Actavis
Cite this
Proportional Restraints and the Patent System. / Hovenkamp, Erik; Lemus, Jorge.
2017.Research output: Working paper
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TY - UNPB
T1 - Proportional Restraints and the Patent System
AU - Hovenkamp, Erik
AU - Lemus, Jorge
PY - 2017/8/30
Y1 - 2017/8/30
N2 - To be mutually-preferred to litigation, patent agreements between rivals often must restrain competition to some degree. Any such agreement forestalls a ruling on the patent’s validity (and hence its enforceability), which depends largely on the “innovativeness” of the invention. Ideally, there would be proportionality between (1) the quality of the patent (the probability it is valid) and (2) the extent to which competition is restrained. We show that antitrust can accomplish this by simply policing the manner in which competition is restrained, and by prohibiting certain side-deals that always subvert proportionality. Different restraints vary considerably — and predictably — in the extent to which bargaining possibilities deviate from the firms’ litigation expectations (which depend on patent quality). We can thus infer the degree of proportionality from the nature of the agreement, making it unnecessary to estimate competitive effects or patent quality.
AB - To be mutually-preferred to litigation, patent agreements between rivals often must restrain competition to some degree. Any such agreement forestalls a ruling on the patent’s validity (and hence its enforceability), which depends largely on the “innovativeness” of the invention. Ideally, there would be proportionality between (1) the quality of the patent (the probability it is valid) and (2) the extent to which competition is restrained. We show that antitrust can accomplish this by simply policing the manner in which competition is restrained, and by prohibiting certain side-deals that always subvert proportionality. Different restraints vary considerably — and predictably — in the extent to which bargaining possibilities deviate from the firms’ litigation expectations (which depend on patent quality). We can thus infer the degree of proportionality from the nature of the agreement, making it unnecessary to estimate competitive effects or patent quality.
KW - Patents
KW - Antitrust
KW - Patent Settlements
KW - Innovation
KW - Licensing
KW - Horizontal Restraints
KW - Validity
KW - Patent Quality
KW - Reverse Payment
KW - Pay for Delay
KW - Actavis
U2 - 10.2139/ssrn.3026380
DO - 10.2139/ssrn.3026380
M3 - Working paper
BT - Proportional Restraints and the Patent System
ER -