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

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Advances in Strategic Management

ISSN: 0742-3322
Series editor(s): Professor Brian Silverman

Subject Area: Strategy

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Document Information:
Title:	Business Method Patents as Real Options: Value and Disclosure as Drivers of Litigation
Author(s):	Atul Nerkar, Srikanth Paruchuri, Mukti Khaire
Volume:	24 Editor(s): Jeffrey J. Reuer, Tony W. Tong ISBN: 978-0-7623-1427-0 eISBN: 978-1-84950-494-2
Citation:	Atul Nerkar, Srikanth Paruchuri, Mukti Khaire (2007), Business Method Patents as Real Options: Value and Disclosure as Drivers of Litigation, in Jeffrey J. Reuer, Tony W. Tong (ed.) Real Options Theory (Advances in Strategic Management, Volume 24), Emerald Group Publishing Limited, pp.247-274
DOI:	10.1016/S0742-3322(07)24009-4 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
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.