Damages and Injunctions in the Protection of Proprietary Research Tools

Mark Schankerman and Suzanne Scotchmer

No 7086, NBER Working Papers from National Bureau of Economic Research, Inc

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 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.

JEL-codes: K0 (search for similar items in EconPapers)
Date: 1999-04
New Economics Papers: this item is included in nep-law
Note: PR LE
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Citations: View citations in EconPapers (5)

Published as Schankerman, Mark & Scotchmer, Suzanne, 2001. "Damages and Injunctions in Protecting Intellectual Property," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 199-220, Spring.

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Working Paper: Damages and Injunctions in the Protection of Proprietary Research Tools (1999)
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