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Damages and injunctions in protecting proprietary research tools

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  • Schankerman, Mark
  • Scotchmer, Suzanne

Abstract

We investigate how liability rules and property rules affect the incentives to invest in research tools. We argue that it is hard to deter infringement under any of the enforcement regimes available. However, counterintuitively, a credible threat of infringement can actually be beneficial to the patentholder. We compare the two doctrines of damages under the liability rule, namely, lost profit (lost royalty) and unjust enrichment, and argue that unjust enrichment protects the patentholder better than lost royalty. Both can be superior to a property rule (the right to enjoin infringement), depending on how much delay is permitted before infringement is enjoined. We also show that, for patents on end-user products, the ranking of liability doctrines is reversed: unjust enrichment is inferior to lost profits.

Suggested Citation

  • Schankerman, Mark & Scotchmer, Suzanne, 2000. "Damages and injunctions in protecting proprietary research tools," LSE Research Online Documents on Economics 177, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:177
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    References listed on IDEAS

    as
    1. Jerry R. Green & Suzanne Scotchmer, 1995. "On the Division of Profit in Sequential Innovation," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 20-33, Spring.
    2. Suzanne Scotchmer, 1996. "Protecting Early Innovators: Should Second-Generation Products Be Patentable?," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 322-331, Summer.
    3. Jean O. Lanjouw & Josh Lerner, 1996. "Preliminary Injunctive Relief: Theory and Evidence from Patent Litigation," NBER Working Papers 5689, National Bureau of Economic Research, Inc.
    4. Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 29-41, Winter.
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    Cited by:

    1. Étienne Pfister, 2004. "Brevet, secret et concurrence technologique. Comment protéger les instruments de recherche ?," Revue d'économie politique, Dalloz, vol. 114(3), pages 323-352.
    2. Joshua S. Gans & Lars Persson, 2013. "Entrepreneurial commercialization choices and the interaction between IPR and competition policy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(1), pages 131-151, February.
    3. Etienne Pfister, 2004. "Brevet, secret et concurrence technologique : comment protéger les instruments de recherche ?," Cahiers de la Maison des Sciences Economiques bla04057, Université Panthéon-Sorbonne (Paris 1).

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    More about this item

    Keywords

    intellectual property; damages; injunctions; research tools.;
    All these keywords.

    JEL classification:

    • K0 - Law and Economics - - General

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