An optimal rule for patent damages under sequential innovation
Yongmin Chen () and
RAND Journal of Economics, 2018, vol. 49, issue 2, 370-397
We analyze the optimal design of damages for patent infringement when a followâ€ on innovator may infringe the patent of an initial innovator. We consider damage rules that are linear combinations of the popular â€œlost profitâ€ (LP) and â€œunjust enrichmentâ€ (UE) rules, coupled with a lumpâ€ 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.
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Working Paper: An Optimal Rule for Patent Damages Under Sequential Innovation (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:randje:v:49:y:2018:i:2:p:370-397
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