Exclusivity and transferability are the main characteristics of a private property right. The owner of a private property right has the legal rights to exclude others from its use, to appropriate the income emanating from its use and to sell it on whatever terms he and the buyer find agreeable. Insecure property rights discourage investors from investing. Property rights in ideas are called intellectual property rights. Intellectual property rights have a public good attribute. The protected information can be consumed by many at the same time. In order to give incentive to invest in innovations the use of the innovative idea has to be restricted (made exclusive). Without a possibility for an entrepreneur to charge for the use of innovative ideas there would be weak investment incentives. A patent is the intellectual property that intends to give an exclusive and transferable right to innovative technical ideas.
However, for a property right to be excludable and transferable it is crucial that it is well defined and legally enforceable. In this sense a patent differs from property rights to physical assets as e.g. ownership to land. To legally defend patents from infringements is costly and often results in a judicial decision that declares the patent invalid (revocation). In other words there is an uncertainty in the definition of the intellectual property right that makes the enforcement of patents costly. This transaction cost differs between jurisdictions. This paper studies different aspects of the legal enforceability of patents. More specifically we study how factors as legal costs, potential damages, duration of legal disputes, percentage of court decisions resulting in infringement or revocation differ between jurisdictions and are likely to affect the decisions of patentees to settle or to rely on a court decision. Litigation data from five different European jurisdictions is used.
Bjuggren, P-O., Domeij, B. & Horn, A. (2015). Swedish Patent Litigation in Comparison to European. Nordisk Immateriellt Rättsskydd, 2015(5), 504-522.