IMPORTANT PART OF ABSTRACT

Our results demonstrate that in ddition to the small number of patent cases going to trial (about 5%), another significant percentage of cases (about 8-9%) are resolved on the merits through summary judgment.

we should still be concerned about the huge transaction costs associated with patent litigation because summary judgments in general, and summary judgment based on invalidity in particular, are expensive compared to summary judgments granted on other grounds.

Overall, our results show that transaction costs associated with patent litigation loom large, and rulings on the merits by the courts concerning patent validity, patent infringement, and remedies for infringement (i.e., injunctive relief or damages) are rare, expensive, and not pursued to completion by most litigants. Instead, most patent cases settle fairly quickly (about 12-15 months) after the filing of the complaint, thereby reducing the actual cost of patent litigation considerably.

Our results strongly suggest that patent litigation is largely a settlement mechanism, and hence, any proposed change in the patent laws should be analyzed in terms of the incentives generated for prompt settlement of patent disputes.