Boston University School of Law

The Private Costs of Patent Litigation

James E. Bessen and Michael J. Meurer

Boston University School of Law Working Paper 07-08

Revised February, 2008

Abstract

This paper estimates the total cost of patent litigation to alleged infringers. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. We find that the total costs of litigation are much greater than legal fees and costs are large even for lawsuits that settle. Lawsuits cost alleged infringers about $28.7 million ($92) in the mean and $2.9 million in the median. MOreover, infringement risk rose sharply during the late 1990s to over 14% of R&D spending. Small firms have lower risk relative to R&D.

Keywords: patent, litigation, litigation cost, property rights

JEL codes: O31, O34, K41

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James E. Bessen Contact Information
jbessen@researchoninnovation.org

Michael J. Meurer Contact Information

meurer@bu.edu

Boston University School of Law
765 Commonwealth Ave
Boston, MA 02215
USA
(617) 353-6292

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