A Puzzle of Knowledge Spillovers during Patent Litigation

Patent litigation is an important component of a strong appropriability regime, critical for ensuring that firms can effectively protect their patented inventions. An issue that has mostly gone unnoticed in the innovation literature is the role of the rules and procedures of patent litigation in helping to create unintended knowledge spillovers. Using an inductive approach, we examine where, what, and how spillovers occur in the litigation process. Our findings demonstrate that knowledge spillovers can happen throughout the litigation process, and benefit not only the defendant but also the plaintiff. Furthermore, we show that the knowledge spilled over is often about proprietary methods and procedures utilized by a litigant to bring about an innovation, above and beyond the knowledge already in the patent. Based on these findings, we develop a framework for how knowledge spillovers happen during litigation, offering a more nuanced perspective on how strong appropriability regimes work. Finally, we suggest a number of directions for future policy development in this arena.