Profit Neutrality in Licensing: The Boundary between Antitrust Law and Patent Law
AbstractFor over a century, courts and commentators have struggled to find principles that reconcile patent and antitrust law, especially as to patent licensing. We interpret case law and commentary to arrive at three unifying principles for acceptable terms of license. Profit neutrality' holds that patent rewards should not depend on the rightholder's ability to work the patent himself. Derived reward' holds that the patent holder's profits should be earned, if at all, from the social value created by the invention. Minimalism' holds that licensing contracts should not contain more restrictions than are necessary to achieve neutrality. We argue that these principles largely rationalize important decisions of the twentieth century. They also justify the Supreme Court's controversial General Electric decision, which holds that patentholders can set prices charged by their licensees.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10546.
Date of creation: Jun 2004
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Publication status: published as Maurer, S. and S. Scotchmer. "Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law." American Law and Economics Review 8: 476-522. 2006.
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Other versions of this item:
- Stephen M. Maurer & Suzanne Scotchmer, 2006. "Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law," American Law and Economics Review, Oxford University Press, vol. 8(3), pages 476-522.
- Maurer, Stephen M. & Scotchmer, Suzanne, 2004. "Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law," Competition Policy Center, Working Paper Series qt6f659351, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Stephen M. Maurer & Suzanne Scotchmer, 2004. "Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law," Law and Economics 0407001, EconWPA.
- Stephen Maurer & Suzanne Scotchmer, . "Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law," American Law & Economics Association Annual Meetings 1090, American Law & Economics Association.
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-13 (All new papers)
- NEP-COM-2004-06-13 (Industrial Competition)
- NEP-LAW-2004-06-13 (Law & Economics)
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