Adjusting Patent Damages for Nonpatent Incentives

27 Pages Posted: 10 May 2017 Last revised: 17 Jan 2019

Date Written: May 10, 2017


Nonpatent innovation policies—including direct spending on grants and procurement, innovation prizes, and R&D tax incentives—are a significant part of innovation policy in practice and are attracting growing attention from legal scholars. When market-based patent incentives undervalue certain inventions, innovation is most efficiently incentivized by using these policies as complements, but in some cases, allowing researchers to claim nonpatent incentives in addition to patent rewards results in significant overcompensation. There are a few potential solutions to this reward-stacking problem, including limiting the patentability of inventions that have received significant alternative rewards, or conditioning nonpatent transfers on some relinquishment of patent rights. When the lost patent rewards are far more valuable than the nonpatent incentives, these solutions might be broader than the problem. This symposium contribution presents and evaluates an additional solution: reducing patent damages to account for the nonpatent rewards (including ex ante risk reduction) an invention has already received. Such an approach could improve not only the incentive side of innovation policy, but also the allocation side, by reducing deadweight loss while maintaining incentives to innovate. The ability of patent damages doctrine to help mediate between different bodies of innovation law is a benefit of recent proposals for patent damages reform that has thus far been overlooked.

Keywords: patent, damages, innovation, R&D, grants, tax

JEL Classification: O31, O34, O38

Suggested Citation

Ouellette, Lisa Larrimore, Adjusting Patent Damages for Nonpatent Incentives (May 10, 2017). Texas Intellectual Property Law Journal, Vol. 26, p. 187, 2018, Stanford Public Law Working Paper, Available at SSRN:

Lisa Larrimore Ouellette (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305
United States


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