Probabilistic Patents, Alternative Damage Rules and Optimal Tariffs

36 Pages Posted: 3 Dec 2019

See all articles by Apurva Dey

Apurva Dey

Indira Gandhi Institute of Development Research (IGIDR)

Arun Kumar Kaushik

O. P. Jindal Global University

Rupayan Pal

Indira Gandhi Institute of Development Research

Date Written: September 5, 2019

Abstract

This paper analyzes interdependencies between optimal trade policy and ‘preferred’ liability doctrine to assess infringement damages, when intellectual property rights are probabilistic, in a model of import competition between a foreign patentee and a domestic infringer. It shows two reversal results. First, a regime switch from protectionism to free trade reverses stakeholders’ preferences over liability doctrines. Second, the optimal trade policy changes from an import tariff under the ‘lost profit’ rule to import subsidization under the ‘unjust enrichment’ rule, unless the patent is weak. It is found that free trade is not optimal, except for a few knife-edge cases.

Keywords: Probabilistic Intellectual Property Rights; Infringement; Damage Rules; Import Competition; Trade Policy

JEL Classification: O34; L13; K40; F13

Suggested Citation

Dey, Apurva and Kaushik, Arun Kumar and Pal, Rupayan, Probabilistic Patents, Alternative Damage Rules and Optimal Tariffs (September 5, 2019). Available at SSRN: https://ssrn.com/abstract=3488984 or http://dx.doi.org/10.2139/ssrn.3488984

Apurva Dey

Indira Gandhi Institute of Development Research (IGIDR)

Gen A.K. Vaidya Marg Santoshnagar
Goregaon (East)
Mumbai, Maharashtra 400065
India

Arun Kumar Kaushik (Contact Author)

O. P. Jindal Global University ( email )

Sonepat Narela road
Sonepat
Sonepat, Haryana 131001
India

HOME PAGE: http://www.jslh.edu.in/content/arun-kumar-kaushik

Rupayan Pal

Indira Gandhi Institute of Development Research ( email )

Gen A.K. Vaidya Marg Santoshnagar
Goregaon (East)
Mumbai, Maharashtra 400065
India

HOME PAGE: http://ideas.repec.org/f/ppa232.html

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