Licensing probabilistic Patents and Liability Rules: The Duopoly case
AbstractIn this paper a game is used to compare the licensing of a cost reduction innovations under lost profits (LP) and unjust enrichment (UE), both damage rules that are used by courts in the calculation of damages when a patent has been infringed. The market is composed by two homogeneous firms that compete in quantities (Cournot), both firmas produces a homogeneous good. One of the firms (patent holder) develops a cost reduction innovation (drastic or non-drastic) and got a patent for this innovation. Under the shadow of probabilistic property rights, It is founded that licensing by using royalty rate is preferred compared with fixed fees, also it is observable little licensing (just big innovations). By comparing LP against UE, it is concluded that for drastic innovation the patentee and licensee are better off under LP. However social welfare is greater under UE. In the case of a non drastic innovation the results do not show a rule better than the other one.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 16872.
Date of creation: 2009
Date of revision:
innovation; law; damage rules; patent; licensing games;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
- P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-22 (All new papers)
- NEP-INO-2009-08-22 (Innovation)
- NEP-IPR-2009-08-22 (Intellectual Property Rights)
- NEP-TID-2009-08-22 (Technology & Industrial Dynamics)
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