Strategic and economic behavior of a sued company in patent litigation

Abstract

This paper identifies strategic and economic determinants affecting a defendant's decision of settlement during litigation by using 3018 cases in the Delaware District Court in the United States. The results show that the potential for settlement is high if the litigation cost to be borne by defendant increases. While, defendant's lawsuit experience and a Markman hearing process clarifying the scope of the patent claims through both parties' evidences induce the defendant's trial decision. This paper also identified that the defendant may make strategically different decisions, depending on the technological field and interactions between the determinants.