We analyze the impact of the probabilistic nature of patents on the functioning of Germany’s bifurcated
patent litigation system where infringement and validity of a patent are decided independently by different
courts. We show that bifurcation creates situations in which a patent is held infringed that is
subsequently invalidated. Our conservative estimates indicate that 12% of infringement cases in which
the patent’s validity is challenged produce such ‘invalid but infringed’ decisions. We also show that having
to challenge a patent’s validity in separate court proceedings means that more resource-constrained
alleged infringers are less likely to do so. We find evidence that ‘invalid but infringed’ decisions create
uncertainty which firms that were found to infringe an invalid patent attempt to reduce by filing more
oppositions against newly granted patents immediately afterwards.
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