Economics at your fingertips  

An optimal rule for patent damages under sequential innovation

Yongmin Chen () and David Sappington

RAND Journal of Economics, 2018, vol. 49, issue 2, 370-397

Abstract: We analyze the optimal design of damages for patent infringement when a follow†on innovator may infringe the patent of an initial innovator. We consider damage rules that are linear combinations of the popular “lost profit†(LP) and “unjust enrichment†(UE) rules, coupled with a lump†sum transfer between innovators. Such linear rules can sometimes induce the socially optimal levels of sequential innovation and the optimal allocation of industry output. The optimal linear rule achieves the highest welfare among all rules that ensure a balanced budget for the industry, and often secures substantially more welfare than either the LP rule or the UE rule.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)

Related works:
Working Paper: An Optimal Rule for Patent Damages Under Sequential Innovation (2016) Downloads
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:

Ordering information: This journal article can be ordered from
http://www.blackwell ... al.asp?ref=0741-6261

Access Statistics for this article

RAND Journal of Economics is currently edited by James Hosek

More articles in RAND Journal of Economics from RAND Corporation Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2020-05-20
Handle: RePEc:bla:randje:v:49:y:2018:i:2:p:370-397