Patent Litigation in the Nineteenth-Century German Empire: An Empirical Analysis of Nullity Proceedings

We provide an empirical analysis of patent litigation in the German Empire by combing micro-level information on nullification decisions by the Imperial Patent Office and the Imperial Court with data on high-value patents. By using nullification decisions (void patents) as a proxy for patent conflicts, we explore differences in the intensity of patent conflicts across and within industries. Our results suggest significant heterogeneity across industries. In the leading sectors of the second industrial revolution (chemicals and electrical engineering) there were relatively few patent conflicts, while we observe a relatively large number of conflicts in rather traditional industries (e.g. shoemaking and sugar refining). Differences in market structure provide a plausible explanation for these observation. In industries with high business concentration and cartelization, patent-conflict intensity was not only smaller because of fewer competition, but the incentives to settle patent conflicts privately were also higher than in industries where many small firms prevented the formation of stable cartels. The formation of patent pools by leading corporations reflects this development.