International Review of Law and Economics.pdfVIP

International Review of Law and Economics 35 (2013) 58–72 Contents lists available at SciVerse ScienceDirect International Review of Law and Economics Explaining the “unpredictable”: An empirical analysis of U.S. patent infringement awards Michael J. Mazzeo a,b,1, Jonathan Hillel c,∗ , Samantha Zyontz d a Kellogg School of Management, Northwestern University, United States b Institute for Policy Research, Northwestern University, United States c Skadden, Arps, Slate, Meagher Flom LLP, United States d Institute for Quantitative Social Science, Harvard University, United States a r t i c l e i n f o a b s t r a c t Article history: Patent infringement awards are commonly thought to be unpredictable, which raises concerns that Received 13 October 2012 patents can lead to unjust enrichment and impede the progress of innovation. We investigate the unpre- Received in revised form 23 February 2013 dictability of patent damages by conducting a large-scale econometric analysis of award values. We begin Accepted 2 March 2013 by analyzing the outcomes of 340 cases decided in US federal courts between 1995 and 2008 in which infringement was found and damages were awarded. Our data include the amount awarded, along with JEL classification: information about the litigants, case specifics and economic value of the patents-at-issue. Using these O34 data, we construct an econometric model that explains over 75% of the variation in awards. We further