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Damages and Injunctions in Protecting Proprietary Research Tools

Author

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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," Department of Economics, Working Paper Series qt3c04n348, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt3c04n348
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    Cited by:

    1. is not listed on IDEAS
    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).
    4. 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.

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    JEL classification:

    • K0 - Law and Economics - - General

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