IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_1778.html
   My bibliography  Save this paper

How Reasonable is the ‘Reasonable’ Royalty Rate? Damage Rules and Probabilistic Intellectual Property Rights

Author

Listed:
  • Jay Pil Choi

Abstract

This paper investigates how different damage rules in patent infringement cases shape competition when intellectual property rights are probabilistic. I develop a simple model of oligopolistic competition to compare two main liability doctrines that have been used in the US to assess infringement damages – the unjust enrichment rule and the lost profit rule. It also points out the logical inconsistency in the concept of the “reasonable royalty rates” when intellectual property rights are not ironclad.

Suggested Citation

  • Jay Pil Choi, 2006. "How Reasonable is the ‘Reasonable’ Royalty Rate? Damage Rules and Probabilistic Intellectual Property Rights," CESifo Working Paper Series 1778, CESifo.
    • Handle: RePEc:ces:ceswps:_1778
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/cesifo1_wp1778.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mark A. Lemley & Carl Shapiro, 2005. "Probabilistic Patents," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 75-98, Spring.
    2. Lemley, Mark A. & Shapiro, Carl, 2004. "Probabilistic Patents," Competition Policy Center, Working Paper Series qt9xf1488p, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    3. Kwoka, John E, Jr, 1992. "The Output and Profit Effects of Horizontal Joint Ventures," Journal of Industrial Economics, Wiley Blackwell, vol. 40(3), pages 325-338, September.
    4. Joseph Farrell & Carl Shapiro, 1990. "Asset Ownership and Market Structure in Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 275-292, Summer.
    5. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908, Elsevier.
    6. Claude Crampes & Corinne Langinier, 2002. "Litigation and Settlement in Patent Infringement Cases," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 258-274, Summer.
    7. Reynolds, Robert J. & Snapp, Bruce R., 1986. "The competitive effects of partial equity interests and joint ventures," International Journal of Industrial Organization, Elsevier, vol. 4(2), pages 141-153, June.
    8. Farrell, Joseph & Shapiro, Carl, 2007. "How Strong Are Weak Patents?," Competition Policy Center, Working Paper Series qt8vg425vj, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    9. Reitman, David, 1994. "Partial Ownership Arrangements and the Potential for Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 313-322, September.
    10. Joseph Farrell & Carl Shapiro, 2008. "How Strong Are Weak Patents?," American Economic Review, American Economic Association, vol. 98(4), pages 1347-1369, September.
    11. F. M. Scherer, 2005. "Patents," Books, Edward Elgar Publishing, number 3903, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Vargas Barrenechea, Martin, 2008. "Licensing probabilistic Patents: The duopoly case," MPRA Paper 9925, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Choi, Jay Pil, 2009. "Alternative damage rules and probabilistic intellectual property rights: Unjust enrichment, lost profits, and reasonable royalty remedies," Information Economics and Policy, Elsevier, vol. 21(2), pages 145-157, June.
    2. Schankerman, Mark & Schuett, Florian, 2016. "Screening for Patent Quality," CEPR Discussion Papers 11688, C.E.P.R. Discussion Papers.
    3. Gilbert, Richard J & Katz, Michael L, 2009. "Efficient Division of Profits from Complementary Innovations," Competition Policy Center, Working Paper Series qt5mr0s11v, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    4. Schankerman, Mark & Schütt, Florian, 2016. "Screening for Patent Quality : Examination, Fees, and the Courts," Other publications TiSEM fa319822-6e68-4e05-8547-4, Tilburg University, School of Economics and Management.
    5. Gilbert, Richard J & Katz, Michael L, 2009. "Efficient Division of Profits from Complementary Innovations," Department of Economics, Working Paper Series qt5mr0s11v, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 315-380, Elsevier.
    7. Gilbert, Richard J. & Katz, Michael L., 2011. "Efficient division of profits from complementary innovations," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 443-454, July.
    8. Bar, Talia & Kalinowski, Jesse, 2019. "Patent validity and the timing of settlements," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    9. David Encaoua & Yassine Lefouili, 2009. "Licensing ‘Weak’ Patents," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 492-525, September.
    10. Andrew Eckert & Corinne Langinier, 2014. "A Survey Of The Economics Of Patent Systems And Procedures," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 996-1015, December.
    11. Cremers, Katrin & Gaessler, Fabian & Harhoff, Dietmar & Helmers, Christian & Lefouili, Yassine, 2016. "Invalid but infringed? An analysis of the bifurcated patent litigation system," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 218-242.
    12. Emil Palikot & Matias Pietola, 2023. "Pay‐for‐delay with settlement externalities," RAND Journal of Economics, RAND Corporation, vol. 54(3), pages 387-415, September.
    13. Mathias Dewatripont & Patrick Legros, 2013. "‘Essential’ Patents, FRAND Royalties and Technological Standards," Journal of Industrial Economics, Wiley Blackwell, vol. 61(4), pages 913-937, December.
    14. Choi, Jay Pil & Gerlach, Heiko, 2019. "Optimal cross-licensing arrangements: Collusion versus entry deterrence," European Economic Review, Elsevier, vol. 120(C).
    15. repec:osf:socarx:qzmf8_v1 is not listed on IDEAS
    16. Cheng‐Tai Wu & Tsung‐Sheng Tsai, 2024. "Patent licensing for signaling the cost‐reduction innovation: The case of the insider innovator," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(1), February.
    17. Gaétan de Rassenfosse & Adam B. Jaffe, 2018. "Are patent fees effective at weeding out low‐quality patents?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(1), pages 134-148, March.
    18. Samuel Haas & Johannes Paha, 2021. "Non-Controlling Minority Shareholdings and Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 431-454, May.
    19. Mark Schankerman & Florian Schuett, 2022. "Patent Screening, Innovation, and Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(4), pages 2101-2148.
    20. Gaétan de Rassenfosse & William E. Griffiths & Adam B. Jaffe & Elizabeth Webster, 2021. "Low-Quality Patents in the Eye of the Beholder: Evidence from Multiple Examiners," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 37(3), pages 607-636.
    21. Konrad, Kai A., 2006. "Silent interests and all-pay auctions," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 701-713, July.

    More about this item

    Keywords

    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ces:ceswps:_1778. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.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.