Impact of patent litigation on the subsequent patenting behavior of the plaintiff small and medium enterprises in Japan

This paper examines the impact of patent litigation on the subsequent patenting behavior of the plaintiff small and medium enterprises (SMEs) in Japan. The results show that plaintiff SMEs tend to reduce patent applications after patent litigation. Although there are several possible interpretations for this finding, we argue that it is most likely due to the negative effects of the high cost of patent litigation on the R&D activities of the plaintiff SMEs during the period of patent litigation. Moreover, we also find that the strength of patent rights applied for by the plaintiff SMEs after patent litigation increases. We argue that this is because the plaintiff SMEs realize the importance of the quality of patent rights and learn how to apply for stronger patent rights after experiencing patent litigation as plaintiffs. However, this learning effect only lasts until the fourth year after litigation and then disappears or starts to reverse beginning with the fifth year after litigation.