Optimal licensing of uncertain patents in the shadow of litigation

@article{Amir2014OptimalLO,
  title={Optimal licensing of uncertain patents in the shadow of litigation},
  author={Rabah Amir and David Encaoua and Yassine Lefouili},
  journal={Games and Economic Behavior},
  year={2014},
  volume={88},
  pages={320-338}
}
This paper investigates the choice of a licensing mechanism by the holder of a patent whose validity is uncertain. Focusing …rst on weak patents, i.e. patents that have a high probability of being invalidated by a court if challenged, we show that the patent holder …nds it optimal to use a per-unit royalty contract if the strategic e¤ect of an increase in a potential licensee’s unit cost on the equilibrium industry pro…t is positive. The latter condition ensures the superiority of the per-unit… CONTINUE READING

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