Business Method Patents as Real Options: Value and Disclosure as Drivers of Litigation

Atul Nerkar, Srikanth Paruchuri, Mukti Khaire

Research output: Chapter in Book/Report/Conference proceedingChapter

15 Scopus citations

Abstract

This paper proposes that patents are real options that allow holders of patents the right but not the obligation to sue others. We suggest that the likelihood of a patent being litigated is positively associated with value of the patent and the extent of disclosure (prior art cited) in the patent. However, under conditions of greater value, increases in disclosure reduce the likelihood of litigation of the focal patent. Similarly, under conditions of greater disclosure, increases in value reduce the likelihood of litigation of the focal patent. Rare events logit analyses of business method patents that were litigated, compared to patents that were not litigated, offer empirical evidence supporting the hypotheses.

Original languageEnglish (US)
Title of host publicationReal Options Theory
EditorsJeffrey Reuer, Tony Tong
Pages247-274
Number of pages28
DOIs
StatePublished - 2007

Publication series

NameAdvances in Strategic Management
Volume24
ISSN (Print)0742-3322

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management

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