Patent Infringement Lawsuit Research Articles

Patent infringement litigation, executive team risk appetite and corporate innovation

ABSTRACT Comprehensively deepening the trial mechanism of patent infringement litigation is important for optimizing law environment for scientific and technological innovation. However, the growing frequency for patent infringement lawsuits significantly impacts the corporate innovation. The existing literature focuses on the direct relationship between patent infringement litigation and corporate innovation without exploring the mechanisms. Based on this, this paper analyzed the effect between patent infringement litigation and innovation and heterogeneity using a fixed effects model on the theoretical model basis. The study found that patent infringement litigation has a positive impact on innovation investment; patent infringement litigation promotes innovative activity through foreign direct investment; executive team risk appetite negatively moderates the relationship between patent infringement litigation and firms’ innovation investment. Patent infringement litigation has a more significant incentive effect on the innovation activities of state-owned enterprises, more open regions, and in the northeast and east regions. This paper not only reveals the mechanism that judicial litigation affects innovation activities but also provides a reference basis to solve patent disputes.

The effects of foreign patent litigation on firms’ patent strategies: evidence from Chinese litigants in the US court

ABSTRACT The internationally orientated market leads to a surge of cross-border patent litigations. Despite the growing literature on patent litigations, research on the impact of patent litigation on firms’ patent strategy is sparse, especially on the impact of foreign patent litigations. Using US patent infringement lawsuits in which Chinese public firms act as defendants, this paper investigates the effect of foreign patent litigation on firms’ subsequent patent outputs and patent trajectories. We find that the experience of foreign patent litigation increases the accused firms’ subsequent patent filings, and those firms tend to apply exploitative patents instead of exploratory patents. We further find that such promoting impact is more pronounced for firms with a high level of international intensity and firms in the ICT industry. These findings highlight the role of foreign patent litigation in future patent creation, thus enriching the literature on patent litigation and international business. According to the results, firms should take foreign patent litigation as an opportunity to build a strong patent portfolio and improve patent strategies.

When your friend takes a fall: Spillovers of patent infringement lawsuits on firm innovation via cross-owners

Patent infringement lawsuits profoundly affect firms' innovation decisions, but few studies explore their spillover effects. In this paper we examine whether patent infringement lawsuits affect innovation of firms not involved but sharing cross-owners with the involved. Using the PSM-DID method and Chinese A-share listed firms’ data from 2009 to 2020, we find that after sued cross-held firms encounter patent infringement lawsuits, uninvolved focal firms increase innovation investment significantly. Information transmission from cross-owners is the important mechanism. Additionally, when sued cross-held firms and uninvolved focal firms belong to the same dialect region, industry, or uninvolved focal firms are non-SOEs, the innovation spillovers of patent infringement lawsuits are more obvious. Finally, we show that after uninvolved focal firms promote innovation input, their current and future innovation output goes up as well. Our study reveals the innovation spillovers of patent infringement lawsuits and expands research on inter-firm interaction through cross-owners.

Does patent infringement litigation affect stock price crash risk? Evidence from China

AbstractPrevious studies have examined the determinants of stock price crash risk. However, extant literature overlooks the relationship between patent infringement litigation and stock price crash risk. Based on a dataset of Chinese firm‐year observations for the period 2007–2021, we fill the gap by examining how patent infringement litigation affects stock price crash risk and the underlying channels through which this effect occurs. We provide robust evidence that corporate patent infringement litigation increases its risk of one‐year‐ahead stock crash. This unfavourable effect is more pronounced in firms that were involved with invention patent infringement lawsuits, lost a patent litigation case, suffered from larger litigation costs and are defendant firms. The channel analysis confirms that increased information risks and exacerbated financial constraints are two plausible channels explaining how patent infringement litigation leads to stock price crash risk. Finally, we find that effective corporate governance and risk‐taking level are conducive to mitigate the unfavourable effect of patent infringement litigation on stock crash risk. This study enriches the literature on stock price crash risk from the perspective of patent infringement litigation.

Metal 3D printing: Patent law, trade secrets, and additive manufacturing.

There has been significant investment in research and development in respect of metal 3D printing in the United States (as well as a number of other jurisdictions). There has been growing conflict over the ownership of intellectual property in respect of metal 3D printing (involving not only patents but also trade secrets and confidential information, as well as contract law and unfair competition). In 2018, Desktop Metal Inc. launched litigation against Markforged Inc. and Matiu Parangi in relation to intellectual property and metal 3D printing in the United States. As well as complaints of patent infringement, Desktop Metal Inc. has alleged that the defendants had engaged in acts of trade secret misappropriation, unfair and deceptive business practices, and breach of contract. Markforged Inc. made various counter-claims of its own. In July 2018, a Federal Jury found that Markforged Inc. did not infringe two patents held by its rival Desktop Metal Inc. Claims of further violations of trade secrets and contract law were also considered. In the end, the dispute was settled, with neither party obtaining an advantage in the litigation. There was further conflict over whether the terms of the settlement in respect of non-disparagement were honored. The parties have also faced further intellectual property conflict. In 2021, Continuous Composites has filed a patent infringement lawsuit against Markforged Inc. In 2021, Desktop Metal Inc. brought legal action against SprintRay in Germany. Drawing upon this case study, this paper considers whether metal 3D printing will disrupt patent law, policy, and practice. It also explores the tension between the use of trade secrets in commercial 3D printing (such as in metal 3D Printing), and the open source ethos of the Maker Movement. This paper considers the larger implications of this intellectual property dispute over metal 3D printing for scarcity, regulation, and the abundance society. It also explores the innovation policies of the Biden administration in respect of advanced manufacturing—with a focus upon metal 3D printing and additive manufacturing.

Pleading standards for patent-related declaratory judgment in the USA

In the USA, a claim for declaratory judgment can be used to establish that a patent is invalid or that there is no infringement. It can be brought by a potential infringer as an initial claim before they face a patent infringement lawsuit. Alternatively, it can be raised as a counterclaim after a patent infringement lawsuit has commenced. Filing a declaratory judgment action can be an attractive option for a variety of reasons, the most common of which is a party expecting to face a patent infringement suit using declaratory judgment to beat the patentee to venue selection by filing first. This choice of venue can have a great impact on strategic considerations by both parties. For example, declaratory judgment plaintiffs should be aware of pleading pitfalls that vary widely based on jurisdiction. On the other hand, a party facing a declaratory judgment claim should also be aware of such...

Financial Market Reaction to Patent Lawsuits against Integrated Circuit Design Companies

With the rapid advancement in technology, Taiwan’s integrated circuit (IC) design companies have made a mark in the international semiconductor industry but are unable to independently develop the key core technologies they need. Therefore, strategic alliances, competition and cooperation have become a means for enterprises to quickly obtain patents and capture the market. However, listed companies upstream and downstream of Taiwan’s supply chain have been facing patent infringement lawsuits in recent years. This research mainly aims to provide investors with investment strategies when companies face patent litigation, analyze the abnormal returns on the underlying stocks through the event research method, and use the cross-sectional multiple regression model to explore the changes in different factors based on the results. The empirical results show that positive abnormal returns are generated before and after a company faces patent litigation and the cumulative abnormal rewards are all positive and significant after the incident, which indicates that the company may still have an opportunity to make a profit when facing patent litigation, which can be used as a reference for investors.

Status Homophily in Negative Strategic Interactions

We examine how firm status determines patent litigation and its consequences for firms. Literature on social status has demonstrated numerous benefits associated with a high-status position and that status transfers through affiliations. Taken together, high-status firms generally engage in transactions with each other rather than with low-status firms. Therefore, we argue that status homophily in firms, i.e. similarity in status, will also occur in patent litigation, i.e. a negative interaction. Consistent with status literature, we argue that uncertainty amplifies the effect of status: uncertainty from the plaintiff side negatively moderates status homophily in patent lawsuits. Research on alleged wrongdoing has demonstrated negative penalties such as decreased evaluations for firms accused of wrongdoing. Moreover, as audiences have a level of uncertainty about the wrongdoing, which the accusers’ status will likely decrease. Thus, we argue that a firm faces financial loss soon after a high-status firm files a patent infringement lawsuit against it. We find support for our hypotheses, suggesting that status homophily has negative outcomes and belonging to an elite group does not protect firms from penalties from audiences.

Attack and defense in patent-based competition: A new paradigm of strategic decision-making in the era of the fourth industrial revolution

The fourth industrial revolution, characterized by hyperautomation and hyperconnectivity, is accelerating the pace of innovation and rapidly reshaping the competitive landscapes of firms. Firms are increasingly competing to secure key resources, such as patents. Patent-based competition, e.g., patent litigation, is increasingly fierce and has been largely used as a strategic weapon against rivals. It is crucial to explore the conditions under which firms can improve their performance when taking action to address patent-based competition. We suggest that the effectiveness of different types of actions is contingent on technological diversification, open innovation, and network position. Using data from the U.S. communications equipment industry on patent infringement lawsuits, we find that firms pursuing attacks perform better. These positive effects are amplified when firms have a more diversified technological portfolio, whereas the adoption of outbound open innovation weakens the positive effects. Furthermore, although defenders are adversely affected when they are attacked, these negative effects are mitigated when firms can utilize inbound open innovation or operate in a less crowded environment. Our study contributes by extending the competitive dynamics literature to the context of patent-based competition.

Emergence of Intellectual Property Ecosystem of Connected Cars and its Analysis

Connected Car has attracted a high interest in the automotive industry. V2X is a standard and a core technology of Connected Car. There are many standard essential patents (SEP) in V2X. In addition, OSS is also used in platforms of Connected Cars. To date, there have been many patent infringement lawsuits based on essential patents in the telecommunications industry around the world, and antitrust authorities in various countries have established guidelines to curb such lawsuits. In other words, patent holders are required to promise licenses based on FRAND declarations, and patent licensees are also required to negotiate licenses in good faith. In the connected car business as well, disputes and lawsuits between patent holders and patent implementers over patents related to SEP and others are unfolding, and an IPR ecosystem is being formed through cooperation among companies to deal with these disputes and lawsuits. In this paper, the formation of IPR ecosystems around connected cars and the battles between patentees and licensees in these ecosystems are summarized and explained.

Patent infringement analysis using a text mining technique based on SAO structure

As can be seen in the emergence of non-practicing entities, patent infringement lawsuits are very significant events for companies, both financially and technologically. Thus, the importance of patent infringement analysis has been emphasized to support a decision-making process of potential stakeholders. Since identifying patent infringement needs to consider various factors, the most appropriate method is to review the expert analysis in each case. However, as the size of valuable data continues to grow in recent years, the need for automated quantitative analysis that enables to perform such processes without experts has increased. Thus, this research aims to develop an automated approach for patent infringement using Subject-Action-Object structure-based text mining technique and SAO2Vec, which focus on the functions of technology in patent documents and product documents. The proposed framework consists of three modules. In the first module, the types of companies in which patent infringement can occur are defined, and then lists of companies selected by various databases are identified. In the second module, vectors of the SAO structures are derived from the patent documents of the selected company using the Doc2Vec-based SAO2Vec. In the last module, the results of the first and second modules are used to calculate the patent infringement indicators. To validate the suggested approach, we applied it to the case of Nintendo, which had recently become an issue in patent infringement lawsuits. We found that the proposed indicators were a statistically good indicator to judge the patent infringement, identifying the pairs of patents that have a high possibility of patent infringement.

Patent trolls in China: Some empirical data

Prior research found that the Chinese patent system is more pro-patentee than once believed. Patent owners performed much better in both infringement lawsuits and post-grant validity reviews in China than in many other countries, such as the United States and Germany. Also, after a finding of infringement, Chinese courts were quite lenient with regard to permanent injunctions. All these pro-patentee tendencies, together with the rapid growth of China's software industry, cast doubt on the prevalence of troll activities in China. This article analyzes 3435 patent infringement lawsuits decided by local people's courts in China in 2015 and 2016 and provides some valuable insights into two important questions: how often do patent trolls litigate in China, and do they adopt different litigation tactics from practicing entities? Based on empirical data, this article finds that, interestingly, both the number and the size of patent trolls in China are relatively small. Although nearly half (1534, or 44.7%) of all patent infringement lawsuits were initiated by non-practicing entities (NPEs), individual inventors, instead of professional businesses, accounted for an overwhelming majority of all NPE cases (1528, or 99.6%). Patent assertion entities (PAEs), by contrast, only initiated four out of 3435 cases (0.1%) in the two-year period under review. If only patents in the computer industry are taken into consideration, then PAEs initiated zero computer-related lawsuits. Nonetheless, this article does observe some trollish litigation tactics worthy of attention and further research. There were 47 repeat litigants – litigants who initiated 10 or more cases; some performed “commercial enforcement,” asserting patents against multiple small retailers instead of against one large manufacturer; and patent owners, on average, waited for a rather long time before enforcing their patents in China. All these behaviors may introduce bias to the incentives to innovate and put pressure on the overall functioning of the Chinese patent system.

Post-grant patent review in China: an empirical analysis

With a series of policies to stimulate innovation and patent activities, China has become a world leader in both patent applications and patent litigation. These major developments, together with the escalated US-China trade tensions, have made China an integral but controversial venue for international patent protection. The Chinese patent system, especially its detailed practice and cases, is in need of a comprehensive empirical study. This article analyzed 8766 Chinese patent invalidity cases decided between 2014 and 2016, which, together with my prior work on patent infringement lawsuits, offers a comprehensive picture on how the bifurcated patent system in China works. First, it found that only a small number, about 2.0 percent, of Chinese patents are ever subject to infringement or invalidity disputes, shedding light on the patent office's rational ignorance of a patent's validity at first place. Second, it found that the invalidity rate for invention patents in China (54.6%) was lower than in many other countries, such as the US (83.9%) and Germany (73%), indicating that the Chinese patent system is more pro-patentee than once believed. Third, it raised the question of Chinese patents’ quality based on various characteristics of these cases, including patent types and petitioners’ entity status.

Federal Judge Seeks Patent Cases

Imagine the following advertisement popping up on Craigslist: FEDERAL JUDGE SEEKS PATENT CASES! (Waco) — Former patent litigator, recently appointed to the U.S. District Court for the Western District of Texas, longs for the intellectual challenge of a good patent fight. Can promise special procedural rules, efficient discovery, and speedy trials. Dismissal, stay, or transfer of case extremely unlikely. File in Waco and get the patent court you've always dreamed of! That probably seems bizarre. Still, and startlingly, it accurately portrays what’s happening in the Waco Division of the U.S. District Court for the Western District of Texas. One judge, appointed to the Western District only three years ago, has been advertising his courtroom through presentations to patent lawyers, comments to the media, procedural practices, and decisions in patent cases as the place to file a patent infringement lawsuit. That advertising has succeeded. In 2016 and 2017, the Waco Division received a total of five patent cases. In 2020, nearly eight hundred patent cases—more than 20 percent of all patent cases nationwide—were filed there. The centralization of patent cases before a single judge, acting entirely on his own to seek out patent litigation, is facilitated by the Western District’s case filing system, which allows plaintiffs to choose the specific judge who will hear their case. These dynamics—a judge advertising for patent cases and plaintiffs shopping for that judge—undermine public confidence in the impartiality of the judiciary, make the court an uneven playing field for litigants, and facilitate the nuisance suits patent trolls favor. Two common-sense reforms would reduce the harms of judge shopping: (1) district judges should, by law, be randomly assigned to cases, and (2) venue in patent cases should be tied to divisions within a judicial district, not just the district as a whole.

Patent Litigation, Competitive Dynamics, and Stock Market Volatility

Recently, the number of patents of enterprises has been increasing year by year, obviously improving the degree of attention paid to the added value of patents by said enterprises, but also creating patent infringement lawsuits. First, through analysis of the position of competitors, it can be seen that the disclosure of patent infringement litigation information influences the abnormal returns of shareholder wealth. Second, through projecting to competitive dynamics, it could be determined whether expected or actual action are consistent or inconsistent, and whether the stock returns and volatilities are obviously changed. This work utilized event study and GJR-GARCH to discuss the information value of short-term abnormal returns and the long-term effect of stock returns and volatilities of patent infringement lawsuits, respectively. The empirical results of this article highlight the significantly negative short-term abnormal returns of plaintiffs when market commonality between the enterprises was higher. In addition, the cumulative abnormal returns of shareholders were reduced when the resource similarity was higher. Finally, in terms of the corresponding plaintiff enterprises, if the expected theory and the actual strategy were inconsistent, then the return and the risk decreased significantly; however, when the strategy was consistent, the return and the risk increased significantly.

미국 연방대법원 TC Heartland 판결 이후 미국 특허침해소송 재판적 법리의 전개양상 -연방순회항소법원 HTC 판결, ZTE 판결, BigCommerce 판결을 중심으로-

미국 연방대법원 TC Heartland 판결 이후 미국 특허침해소송 재판적 법리의 전개양상 -연방순회항소법원 HTC 판결, ZTE 판결, BigCommerce 판결을 중심으로-

Factor market rivalry and interindustry competitive dynamics

We study competitive dynamics by using 10 years of data from the biotech industry on patent infringement lawsuits because they capture offensive actions and defensive responses. Results suggest that larger patent portfolios, long‐term partnerships, and short‐term agreements lead to factor market rivalry. Specifically, long‐term research partnerships are associated with lower proclivity and vulnerability to attack, while short‐term licensing and marketing agreements with increased proclivity and vulnerability to attack. Lastly, although nonbiotech companies attack biotech firms, the proclivity of the latter to launch cross‐industry attacks is not significant. We discuss how the results contribute to competitive dynamics research and theory.

The trend in patent infringement litigation against generic drugs or biosimilars in Japan

The timing of market entry for generic drugs or biosimilars based on patent expiration is not always clear for producers of generic drugs and biosimilars or brand-name drug companies, because of an uncertainty due to patent infringement, the market environment, and legislation. In Japan, the policy of promoting the use of generic drugs began in the early 2000s, and the government’s target for generic drug use rate is 80% by 2020. In addition to this drastic change in the market environment, changes in legislation have complicated the timing of market entry for generic drugs and biosimilars. Although there is a relatively low number of patent infringement lawsuits filed against producers of generic drugs and biosimilars each year, emerging litigation issues are likely influenced by recent changes in the market environment and legislation. This article provides an overview of recent legislative changes, analyzes the trends in patent infringement litigation, and discusses litigation issues related to the stable supply of generic drugs and biosimilars in Japan. In light of the emerging issues in this field, producers of generic drugs and biosimilars will require more diligence to avoid patent infringement, and institutional reforms are suggested to reduce an increase in patent infringement litigation.

미국 특허침해소송 재판적에 대한 법리의 역사적 전개과정 : 미국 연방대법원 TC Heartland 판결을 중심으로

미국 특허침해소송 재판적에 대한 법리의 역사적 전개과정 : 미국 연방대법원 TC Heartland 판결을 중심으로

Sue First, Negotiate Later

One of the more curious features of patent law is that patents can be challenged by anyone worried about being sued. This challenge right allows potential defendants to file a declaratory relief lawsuit in their local federal district court, seeking a judgment that a patent is invalid or noninfringed. To avoid this home-court advantage, patent owners may file a patent infringement lawsuit first and, by doing so, retain the case in the patent owner’s venue of choice. But there is an unfortunate side effect to such preemptive lawsuits: they escalate the dispute when the parties may want to instead settle for a license. Thus, policies that allow challenges are favored, but they are tempered by escalation caused by preemptive lawsuits. To the extent a particular challenge rule leads to more preemptive lawsuits, it might be disfavored. This article tests one such important challenge rule. In MedImmune v. Genentech, the U.S. Supreme Court made it easier for a potential defendant to sue first. Whereas the prior rule required threat of immediate injury, the Supreme Court made clear that any case or controversy would allow a challenger to file a declaratory relief action. This ruling had a real practical effect, allowing recipients of letters that boiled down to, “Let’s discuss my patent,” to file a lawsuit when they could not before. This was supposed to help alleged infringers, but not everyone was convinced. Many observers at the time predicted that the new rule would lead to more preemptive infringement lawsuits filed by patent holders. They would sue first and negotiate later rather than open themselves up to a challenge by sending a demand letter. Further, most who predicted this behavior—including parties to lawsuits themselves—thought that non-practicing entities would lead the charge. Indeed, as time passed, most reports were that this is what happened: that patent trolls uniquely were suing first and negotiating later. But to date, no study has empirically considered the effect of the MedImmune ruling to determine who filed preemptive lawsuits. This Article tests MedImmune’s unintended consequences. The answer matters: lawsuits are costly, and while “quickie” settlements may be relatively inexpensive, increased incentive to file challenges and preemptive infringement suits can lead to entrenchment instead of settlement. Using a novel longitudinal dataset, this article considers whether MedImmune led to more preemptive infringement lawsuits by NPEs. It does so in three ways. First, it performs a differences-in-differences analysis to test whether case duration for the most active NPEs grew shorter after MedImmune. One would expect that preemptive suits would settle more quickly because they are proxies for quick settlement cases rather than signals of drawn out litigation. Second, it considers whether, other factors equal, the rate of short-lived case filings increased after MedImmune. That is, even if cases grew longer on average, the share of shorter cases should grow if there are more placeholders. Third, it considers whether plaintiffs themselves disclosed sending a demand letter prior to suing. It turns out that the conventional wisdom is wrong. Not only did cases not grow shorter – cases with similar characteristics grew longer after MedImmune. Furthermore, NPEs were not the only ones who sued first and negotiated later. Instead, every type of plaintiff sent fewer demand letters, NPEs and product companies alike. If anything, the MedImmune experience shows that everyone likes to sue in their preferred venue. As a matter of policy, it means that efforts to dissuade filing lawsuits should be broadly targeted, because all may be susceptible.