The Role of Legal Presumptions in Patent Litigation

We formally analyze the effects of legal presumptions in patent litigation. We set up a novel contest model to study litigation outcomes, judgement errors, and resource dissipation under three alternative presumption criteria: a presumption that the patent is valid; a presumption that the patent is invalid; no presumption regarding validity. Our findings reveal that any legal presumption – either in favor of validity or invalidity – is preferable than a no-presumption criterion when there is high uncertainty about the patent’s objective merit.