TY - JOUR
T1 - Alternative damage rules and probabilistic intellectual property rights
T2 - Unjust enrichment, lost profits, and reasonable royalty remedies
AU - Choi, Jay Pil
N1 - Copyright:
Copyright 2009 Elsevier B.V., All rights reserved.
PY - 2009/6
Y1 - 2009/6
N2 - This paper investigates how alternative damage rules in patent infringement cases shape competition when intellectual property rights are probabilistic. More specifically, I develop a simple model of oligopolistic competition to compare two main liability doctrines that have been used in the U.S. to assess infringement damages - the unjust enrichment rule and the lost profit rule. I show that the lost profit rule provides more protection to the patent holder than the unjust enrichment rule if the patent holder and infringer are equally efficient. When the lost profits from the infringement cannot be proved, the court accepts a "reasonable royalty rate" that would have been negotiated in a hypothetical bargaining situation as an alternative measure of damage. However, I point out that the concept of "reasonable" royalty rates lacks logical consistency when intellectual property rights are probabilistic.
AB - This paper investigates how alternative damage rules in patent infringement cases shape competition when intellectual property rights are probabilistic. More specifically, I develop a simple model of oligopolistic competition to compare two main liability doctrines that have been used in the U.S. to assess infringement damages - the unjust enrichment rule and the lost profit rule. I show that the lost profit rule provides more protection to the patent holder than the unjust enrichment rule if the patent holder and infringer are equally efficient. When the lost profits from the infringement cannot be proved, the court accepts a "reasonable royalty rate" that would have been negotiated in a hypothetical bargaining situation as an alternative measure of damage. However, I point out that the concept of "reasonable" royalty rates lacks logical consistency when intellectual property rights are probabilistic.
UR - http://www.scopus.com/inward/record.url?scp=67349287882&partnerID=8YFLogxK
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U2 - 10.1016/j.infoecopol.2008.11.001
DO - 10.1016/j.infoecopol.2008.11.001
M3 - Article
AN - SCOPUS:67349287882
VL - 21
SP - 145
EP - 157
JO - Information Economics and Policy
JF - Information Economics and Policy
SN - 0167-6245
IS - 2
ER -