An optimal rule for patent damages under sequential innovation

• 成果类型: Article
• 署名作者: Chen, Yongmin; Sappington, David E. M.
• 署名单位: University of Colorado System; University of Colorado Boulder; State University System of Florida; University of Florida
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12229
• 发表日期: 2018
• 页码: 370-397
• 关键词: policy; SCOPE

摘要

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.