On patent strength, litigation costs, and patent disputes under alternative damage rules

Bertrand Chopard, Thomas Cortade and Eric Langlais

No 2014-41, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: This paper analyzes the effects of two damage rules (Lost Profi t vs Unjust Enrichment) mainly used by Courts in patent litigations. In our model, the Infringer either is a mere imitator of the Patentee or introduces incremental innovations, and litigation costs are private information such that a pretrial settlement may be better for both litigants. We show that the Unjust Enrichment rule yields less trials than the Lost Pro fit one. But regarding three main objectives, Patentee's protection, incentives to invest in R&D, and social welfare maximization,we find that no rule is better than the other generally speaking. Our model also allows to emphasize how the combination between the size of litigation costs, the negotiation gains and the IPR strength, shapes the incentives to enforce as well infringe a IPR, although in a way specifi c to each rule.

Keywords: intellectual property; probabilistic patents; patent litigations; incremental innovations; pretrial negotiations; legal costs; imperfect competition. (search for similar items in EconPapers)
JEL-codes: D8 K2 K4 L1 L4 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind, nep-ino, nep-ipr, nep-pr~ and nep-law
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Working Paper: On patent strength, litigation costs, and patent disputes under alternative damage rules (2014)
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