This study proposes a divergent expectation model for patent infringement disputes, where both litigation and settlement are driven by patent quality. Under the model, patent quality depends on both broadness and definiteness of the patent. The model predicts that technologies where the definiteness attribute can be estimated with high accuracy will have higher settlement rates. At trial, it is rather the assessment of the patent quality by the judge which decides the outcome. In its empirical section, the paper evaluates over a thousand hand-collected and hand-coded patent infringement and counterclaim decisions rendered by courts in the three largest patent granting European countries—Germany, France and the United Kingdom. The paper utilizes empirical methods to investigate whether the characteristics of the patents or the country of litigation predict the outcome of litigation. Examination of the patent characteristics is guided by the factors of our model, in that the patent quality, and underlying technology and industry are tested. The findings provide evidence of the continuing heterogeneity of the patent systems in Europe, despite the harmonization efforts. Demonstrated was the lack of importance of the characteristics of the litigated patent; rather, it was the forum to which the case was brought that was decisive. At the dawn of the Unified Patent Court, our study provides for a window into the extent of heterogeneity still prevailing and a starting point for monitoring the further development of European patent harmonization.
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