Probabilistic Patents

Mark A. Lemley, Stanford Law School, and Carl Shapiro, Professor of Economics, University of California at Berkeley

8/22/2008
(Original Publish Date: 3/1/2005)

The risk that a patent will be declared invalid is substantial. Roughly half of all litigated patents are found to be invalid, including some of great commercial significance. For example, Chiron’s patent on monoclonal antibodies specific to breast cancer antigens was invalidated by a jury in 2002 in a suit in which Chiron had sought over $1 billion in damages from Genentech. A decision by the U.S. Court of Appeals for the Federal Circuit to invalidate an Eli Lilly patent on Prozac in 2000, less than two years before the patent was set to expire, caused Lilly’s stock price to drop 31 percent in a day.