Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/71072 
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Papers No. 13-015
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
I analyse how patent litigation outcome in Germany affects the performance of the disputing firms by interpreting changes in a firm's credit rating as a proxy for changes in firm performance. The results match theoretical considerations on the functioning of the bifurcated German patent litigation system: The separation of litigation and invalidity decisions, resulting in invalidity decisions taking much longer than decisions on infringement, provides patent holders with a window of opportunity to enforce patents that may later be invalidated. This shifts a major share of the immediate risk to the defendant and allocates bargaining power to the plaintiff. The estimation results provide support for this incongruity. Plaintiffs on average profit from litigation while defendants agreeing upon a settlement deal lose as much as defendants losing in trial. I further show that small, inexperienced defendant firms are at a disadvantage when dealing with litigation.
Subjects: 
Patent
Patent Litigation
Credit Rating
Firm Value
JEL: 
O34
K41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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