2008 International Industrial Organization Conference (IIOC)

MAY 20, 2008

After attending the IIOC conference last year I was back this weekend at the 2008 IIOC event which took place at Marymount University in Virginia. I presented the latest version of two of my papers: The Control of Porting in Two-Sided Markets and Forever Minus a Day? Theory and Empirics of Optimal Copyright Term.

I also provided discussant comments on Christopher Ellis’s and Wesley Wilson’s paper entitled Cartels, Price-Fixing, and Corporate Leniency Policy:What Doesn’t Kill Us Makes Us Stronger. In addition I include below some very partial notes on some of the sessions I attended – though activity in this regard was rather limited by the fact that, though there were more papers overall than last year (388 in total), sessions were organized into more breadth and less length.

Transaction Costs and Trolls: the Behaviour of Individual Inventors, Small Firms and Entrepreneurs in Patent Litigation (Gwendolyn Ball and Jay Kesan)

  • Explore settlements in relation to patents. Questions:
    • How often do settlements happen relative to litigation
    • Are small firm and entrepreneurs at a major disadvantage in defending their patents
    • Or do patent trolls' use the threaof litigation to extort’ payments
      • NTP vs. RIM ($612M)
      • Saffron vs. Boston Scientific ($412M to individual doctor who had an infringed heart stent patent)
    • Does nature of defendant/plaintiff (L/M/S) affect likelihood of settlement
  • Existing databases not so great
    • Only list trial outcomes not pre-trial outcomes
    • Often only list primary plaintiffs
    • Fix this and link patent litigation to companies
  • Results
    • Claimed usually that 95% cases settle
      • In fact 8% are resolved at pre-trial (still expensive)
      • 4% settled at trial
      • so ~ 88% settle
    • Troll stuff:
      • 97 licensing firms as plaintiffs (none as defendants). These may be classic trolls but they are a small part of overall litigation.
      • Evidence shows that entrepreneurs and small inventors are very active (so do not seem particularly disadvantaged) and often sue each other rather than larger firms
      • Crudely: small inventors more likely to pursue a case to the end than large litigators
  • Discussant comments:
    • Bessen and Meurer find $28M hit on firms facing litigation
    • Issues of correlated errors across cases
  • My comments:
    • probably need to disaggregate across areas – after all no-one has suggested ‘trolling’ is an issue in traditional pharma
    • (for me) it would be useful to have an idea how many cases ‘settle’ at the ‘letter stage’, that is, before anything even turns up in the court system. After all you only get to the courts (even with preliminaries) if you cannot sort out a license.

Prior Art - To Search or Not to Search (Vidya Atal)

  • Alcacer + Gittelman 2006 showed 40% had prior art added by USPTO examiner
  • 2/3 citations on an average patent added by USPTO
  • Langinier + Marcoul (2003), Lampe (2007) – incentive to disclose prior art
  • Issue of bad (non-novel) patents may be because people have poor incentives to search
  • Mainly related this to fact that even a bad patent (if it gets past examination) has a +ve payoff