Damages and Injunctions in the Protection of Proprietary Research Tools

Suzanne Scotchmer and Mark Schankerman
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Suzanne Scotchmer: UC Berkeley
Mark Schankerman: London School of Economics

No 1130, Berkeley Olin Program in Law & Economics, Working Paper Series from Berkeley Olin Program in Law & Economics

Abstract: Profit on proprietary research tools is determined partly by the remedies for infringement, such as damages and injunctions. We investigate how damages under a liability rule and the opportunity for injunctions under a property rule can affect the incentives to develop research tools. We show that the prevailing legal doctrine of damages under the liability rule, called lost profit or reasonable royalty, suffers from a logical circularity which leads to an indeterminacy in permissible damages. This can create insufficient incentives to develop research tools. Incentives can be improved either by a property rule with injunctions or by a liability rule under the doctrine of unjust enrichment.

Date: 1999-03-29
Note: oai:cdlib1:blewp-1130
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