IDEAS home Printed from https://ideas.repec.org/a/bla/randje/v49y2018i2p370-397.html

An optimal rule for patent damages under sequential innovation

Author

Listed:
  • Yongmin Chen
  • David E.M. Sappington

Abstract

We analyze the optimal design of damages for patent infringement when a follow†on innovator may infringe the patent of an initial innovator. We consider damage rules that are linear combinations of the popular “lost profit†(LP) and “unjust enrichment†(UE) rules, coupled with a lump†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.

Suggested Citation

  • Yongmin Chen & David E.M. Sappington, 2018. "An optimal rule for patent damages under sequential innovation," RAND Journal of Economics, RAND Corporation, vol. 49(2), pages 370-397, June.
    • Handle: RePEc:bla:randje:v:49:y:2018:i:2:p:370-397
    DOI: 10.1111/1756-2171.12229
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1756-2171.12229
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1756-2171.12229?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Yongmin, 2020. "Improving market performance in the digital economy," China Economic Review, Elsevier, vol. 62(C).
    2. Ganguly, Madhuparna, 2021. "Competition and Innovation: the effects of scientist mobility and stronger patent rights," MPRA Paper 107831, University Library of Munich, Germany.
    3. Turner, John L., 2018. "Input complementarity, patent trolls and unproductive entrepreneurship," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 168-203.
    4. Ganguly, Madhuparna, 2021. "Stronger Patent Regime, Innovation and Scientist Mobility," MPRA Paper 107635, University Library of Munich, Germany.
    5. Bar, Talia & Kalinowski, Jesse, 2019. "Patent validity and the timing of settlements," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    6. Leiva Bertran, Fernando J. & Turner, John L., 2017. "Welfare-optimal patent royalties when imitation is costly," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 457-475.
    7. Ganguly, Madhuparna, 2024. "Stronger Patent Regime, Innovation and Scientist Mobility," Research in Economics, Elsevier, vol. 78(4).
    8. Jinglei Huang & Danxia Xie & Zhihao Xu, 2024. "Sequential innovation and contribution distribution: measurement from game live-streaming industry," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.
    9. Madhuparna Ganguly, 2020. "Stricter patent regime, scientist mobility and innovation," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-037, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • K2 - Law and Economics - - Regulation and Business Law
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:randje:v:49:y:2018:i:2:p:370-397. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/randdus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.