Seminar  |  19.03.2018 | 12:00  –  13:00

Brown Bag-Seminar: The Effect of Patent Litigation Insurance: Evidence from NPEs

Christian Helmers (Santa Clara University)

Max-Planck-Institut für Innovation und Wettbewerb, München, Raum 313

We analyze the extent to which private defensive litigation insurance deters patent assertion by non-practicing entities (NPEs). We do so by studying the effect that a patent-specific insurance product, offered by a leading litigation insurer, had on the litigation behavior of insured patents' owners, all of which are NPEs. We first model the impact of defensive litigation insurance on the behavior of patent enforcers and accused infringers. Next, we empirically evaluate the insurance policy's effect on the owners of insured patents by comparing their subsequent assertion of insured patents with their subsequent assertion of other patents they own that were not included in the policy. We additionally compare the assertion of insured patents with patents held by other NPEs with portfolios that were entirely excluded from the insurance product. Our findings suggest that the introduction of this insurance policy had a large, negative effect on the likelihood that a patent included in the policy was subsequently asserted, and our results are robust across all control groups that we constructed. Our results have importance for ongoing debates on the need to reform the U.S. and European patent systems, and suggest that market-based mechanisms could help deter so-called “patent trolling.”

Ansprechpartner: Dr. Fabian Gaessler