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Certain patent offices offer the possibility for third parties to opposegranted patents that they deem invalid. As opposing a patent is a costly move,it can be inferred that only patents with some damaging effects on competition,and thus some economic value, will be opposed. Hence the fact that a patent isopposed can be interpreted as a signal of value. Further, patents that survivesuch opposition are proven to be strong patents that offer their holders theprospect of high profitability.Few patents are opposed. In 2006, the opposition rate at the EPO wasaround 5.4% (oppositions were filed against 2 990 patents). Of the patentsopposed at the EPO, roughly one-third are revoked, one-third are maintainedunchanged, and one-third are maintained amended. At the USPTO, interestedparties wishing to challenge a US patent after it has been issued have twooptions: i)challenge the patent in federal court; or ii)request a “re-examination”of the patent by the USPTO. The opposition rate at the EPO is much higher thanthe re-examination rate at the USPTO for all technology classes (Merges, 1999;Graham et al., 2002). The rate of re-examination at the USPTO between 1981and 1998 was 0.3% (of grants), whereas at the EPO, the average opposition ratefor the same period was 8.6% of grants. However, in absolute terms, patentlitigation grew significantly in the United States from 1985 to 2000, althoughthe rate of litigation relative to the number of issued patents has remainedconstant (Graham et al., 2002).Some authors have found that opposed and litigated patents are ofhigher than average value. Harhoff et al.(2002) find that successful defenceagainst opposition (in the German patent system) is a particularly strongpredictor of patent value.14They explain that stronger patent rights survivewhat amounts to a two-tier selection process (grant and survival of opposition),which provides a highly reliable indicator of their quality. According toLanjouw and Schankerman (1998), patents that are litigated have particularcharacteristics. Compared to a random sample of US patents from the samecohorts and technology areas, the authors find that more valuable patentsand those with domestic owners are considerably more likely to be involvedin litigation. Patents owned by individuals are at least as likely to be thesubject of a case as corporate patents and litigation is particularly frequentin new technology areas.Notes1. Inventions with high technical value might be widely appropriable (e.g.because apatent is easy to circumvent in the invention’s particular field of technology).Inventions with small technical value may generate high economic value, e.g.if theinventor, for various reasons, already has a monopoly position on the market.