Optimal Remedies for Patent Infringement

36 Pages Posted: 4 Dec 2015 Last revised: 8 Mar 2016

See all articles by Mengxi Zhang

Mengxi Zhang

Institute for Microeconomics, University of Bonn

Keith N. Hylton

Boston University - School of Law

Date Written: December 3, 2015

Abstract

This paper derives optimal remedies for patent infringement, examining damages awards and injunctions. The fundamental optimality condition that applies to both awards and injunctions equates the marginal static cost of intellectual property protection with the marginal “dynamic” benefit from the innovation thereby induced. We find that the optimal damages award may be greater than (or less than) the standard “lost profits” measure, depending on the social value of the innovation. When the social value of the patent is sufficiently high, the optimal award induces socially efficient investment by giving the innovator the entire social value of her investment.

Keywords: Optimal Patent Damages, Patent Infringement, Optimal Injunction Scope

JEL Classification: D42, K13, L40, O31, O34

Suggested Citation

Zhang, Mengxi and Hylton, Keith N., Optimal Remedies for Patent Infringement (December 3, 2015). Boston Univ. School of Law, Law and Economics Research Paper No. 15-53. Available at SSRN: https://ssrn.com/abstract=2698413 or http://dx.doi.org/10.2139/ssrn.2698413

Mengxi Zhang

Institute for Microeconomics, University of Bonn ( email )

Bonn, 53113
Germany

HOME PAGE: http://https://sites.google.com/bu.edu/mengxizhang

Keith N. Hylton (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-8959 (Phone)
617-353-3077 (Fax)

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