%0 Report
%9 Working Paper
%A Chiou, Jing-Yuan
%A Schmidtke, Richard
%D 2010
%F eprints:97
%K Probabilistic Patents, Antitrust Limits, Patent Settlements
%T Revisiting Antitrust Limits to Probabilistic Patent  Disputes: Strategic Entry and Asymmetric  Information
%U http://eprints.imtlucca.it/97/
%X We consider separately strategic entry and asymmetric information in the design  of the settlement policy governing patent disputes, with a focus on Shapiro (2003)’s  consumer protection rule. We show that, when a potential entrant strategically incurs  an entry cost before engaging in a patent dispute, a more stringent settlement policy  of deterring costly entry is preferable to the patent-holder and may lead to higher  static efficiency. Concerning asymmetric information, when the disputants, but not  the court, learn the patent validity, we derive an “expectation test,” which requires  that a laxer settlement policy be coupled with higher expected patent validity under  settlement.
%Z JEL codes: O3, L1, L4, K4