Effects of patent privateering on settlements and R&D under sequential market entry

authored by

Felix B. Klapper, Christian Siemering

Abstract

We investigate patent litigation, settlements and R&D incentives on a market where two firms develop technologies in order to obtain patents and produce goods. Firms may sell IP rights to a Patent Assertion Entity (PAE) that acts as intermediary for patent monetization. We find that compared to simultaneous market entry, the effect of this so-called patent privateering is mitigated if firms enter sequentially. Furthermore, we show that privateering may decrease industry profits by distortion of R&D incentives even when there is no rent extraction by the PAE.

Organisation(s)

Faculty of Economics and Management

Type

Article

Journal

Information economics and policy

Volume

66

No. of pages

14

ISSN

0167-6245

Publication date

03.2024

Publication status

Published

Peer reviewed

Yes

ASJC Scopus subject areas

Economics and Econometrics, Management, Monitoring, Policy and Law

Electronic version(s)

https://doi.org/10.1016/j.infoecopol.2024.101080 (Access: Open)