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Optimal Remedies for Patent Infringement: A Transactional Model


Paul J. Heald


University of Illinois College of Law

September 23, 2008

U of Chicago Law & Economics, Olin Working Paper No. 431
U of Chicago, Public Law Working Paper No. 236

Abstract:     
In a world of zero transaction costs, one should observe optimal invention and innovation. As long as a system of enforceable contracts were in place, firms with inventive capacity and firms requiring inventions would negotiate for the optimal production of new creations. With adequate information, an observer could accurately predict which transactions would occur between firms and which transactions would not, thereby permitting description of the conditions for optimal inventiveness. Patent remedies in a world with transactions costs can be calibrated so that real firms behave as ideal firms, providing incentives for real world transactions to mimic those in a world without transactions costs. The goal of remedies for patent infringement should therefore be to provide incentives for efficient transactions to occur, while minimizing the cost of transacting. This approach sets the framework for a comprehensive revision of current patent remedies and resolves current debates over the relevance of an infringer's knowledge, independent invention, and the proper scope of injunctive relief.

Number of Pages in PDF File: 45

Keywords: patent, remedies, hold up, troll, injunctions, damages, royalty, license, efficiency, economics, Coase, transactional costs

JEL Classification: O3, H42, K00, L1, C00

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Date posted: October 5, 2008  

Suggested Citation

Heald, Paul J., Optimal Remedies for Patent Infringement: A Transactional Model (September 23, 2008). U of Chicago Law & Economics, Olin Working Paper No. 431; U of Chicago, Public Law Working Paper No. 236. Available at SSRN: http://ssrn.com/abstract=1278062 or http://dx.doi.org/10.2139/ssrn.1278062

Contact Information

Paul J. Heald (Contact Author)
University of Illinois College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
706-372-2567 (Phone)
HOME PAGE: http://www.law.illinois.edu/faculty/profile/PaulHeald

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