Patent Damages and Spatial Competition

38 Pages Posted: 26 Jul 2007  

Matthew Henry

Cleveland State University

John L. Turner

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 2007

Abstract

This paper examines the impact of three patent damage regimes on licensing and competition between a patentee and imitator. We focus on product patents in a differentiated, duopoly setting. Neither per-unit royalties nor fixed fees under efficient licensing are unique in equilibrium. As a result, the "reasonable royalty" damage regime's application of a hypothetical negotiation gives the court significant discretion in assigning damages. The lost profits regime, the only one that may deter infringement, typically yields the highest incentives to innovate for highly valuable products. The unjust enrichment regime is weakest. Our results offer an efficiency argument for abandoning it.

Keywords: Patent, litigation, damages, spatial, differentiated

JEL Classification: K2, O3

Suggested Citation

Henry, Matthew and Turner, John L., Patent Damages and Spatial Competition (July 2007). Available at SSRN: https://ssrn.com/abstract=1002976 or http://dx.doi.org/10.2139/ssrn.1002976

Matthew Henry

Cleveland State University ( email )

Cleveland, OH
United States
216-687-4532 (Phone)

HOME PAGE: http://www.csuohio.edu/class/economics/people/henry.html

John L. Turner (Contact Author)

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

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