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In this paper, we present a simple patent licensing-litigation game to study how a patent holder's access to injunctions against an alleged infringer of a standard essential patent affects equilibrium royalty rates and litigation outcomes. In the European Court of Justice's Huawei v. ZTE judgment, the Court stipulates that injunctions are granted only if the patent holder's royalty rate offer is fair, reasonable, and non-discriminatory (FRAND) while the implementer's counteroffer is not. In recent decisions, German courts have deviated from this ruling by granting injunctions regardless of the nature of the patent holder's offer, only requiring a non-FRAND counteroffer by the implementer. Expanding the access to injunctions in this way introduces the possibility of injunctions being granted even if the original offer is non-FRAND. We find that when the court's assessment of FRAND is sufficiently noisy, this can lead to higher equilibrium royalties and an increased risk of patent hold-up. Increased royalties are driven by the patent holder making more aggressive offers and the implementer responding with more cautious counteroffers to avoid triggering an injunction. Because in the amended framework, the patent holder's offer is immaterial for the court's injunction decision, a more cautious counteroffer can eventually decrease the court's use of injunctions and lower injunction rates, particularly for intermediate levels of court noise. Welfare implications of more accessible injunctions depend on the interpretation of the optimal FRAND rate. [ABSTRACT FROM AUTHOR]

In many jurisdictions, the existence and contents of patent applications are unknown to third parties until the application is published by the patent office at least 18 months after the initial filing. In contrast to other features of the patent system, this publication lag has received little analytical attention. The patent applicant can expedite public awareness of the existing application and the respective technology by announcing the patent application before its automatic publication. In our model, the applicant balances a negative effect of disclosure on its informational advantage in the short run (value of secrecy) with a positive long-run effect stemming from potential deterrence of a rival's R&D (value of deterring innovation). We give conditions under which announcing the pending patent deters a rival's innovation. We show that, in equilibrium, the applicant's decision to announce and the rival's decision to innovate are non-monotonic in the strength of the application and the strength of the patent. We present evidence supporting core predictions of our model by identifying press releases, one channel for disclosing business information, that announce nothing but the recent filing of patent applications. Using a technique suggested in the corporate finance literature, we estimate a measure of the nature of competition for all major NAICS codes. In doing so, we are the first to provide broad evidence supporting the prediction dating back to Gal-or (1986) that cost disclosure depends on the nature of competition in an industry. [ABSTRACT FROM AUTHOR]