Injunctions, Hold-Up, and Patent Royalties-super-1

Carl Shapiro ()

American Law and Economics Review, 2010, vol. 12, issue 2, pages 509-557

Abstract: A simple model is developed to study royalty negotiations between a patent holder and a downstream firm whose product is more valuable if it includes a feature covered by the patent. The downstream firm must make specific investments to develop, design, and sell its product before patent validity and infringement will be determined. The hold-up component of the negotiated royalties is greatest for weak patents covering a minor feature of a product with a high margin between price and marginal cost. For weak patents, the hold-up component of negotiated royalties remains unchanged even if negotiations take place before the downstream firm designs its product. The analysis has implications for the use of injunctions in patent infringement cases. Copyright 2010, Oxford University Press.

Date: 2010
References: Add references at CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/aler/ahq014 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:oup:amlawe:v:12:y:2010:i:2:p:509-557

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

American Law and Economics Review is edited by Hon. Richard A. Posner

More articles in American Law and Economics Review from Oxford University Press
Address: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Series data maintained by Oxford University Press ().