Profit Neutrality in Licensing: The Boundary between Antitrust Law and Patent Law

UC Berkeley, Center for Competition Policy Working Paper No. CPC04-43

45 Pages Posted: 18 Feb 2004

See all articles by Stephen M. Maurer

Stephen M. Maurer

University of California, Berkeley

Suzanne Scotchmer

University of California - Department of Economics (Deceased); University of California, Berkeley - School of Law; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: June 26, 2006

Abstract

From the antitrust case law that governs restrictions on patent licenses, we derive three unifying principles: just reward, profit neutrality and minimalism. The just-reward principle holds that the patentholder's profits should be earned, if at all, from the social value created by his invention. Profit neutrality holds that patent rewards should not depend on the rightholder's ability to work the patent himself. Minimalism holds that licensing contracts should not use more restrictive terms than required for neutrality. We discuss how these principles determine which patent license restrictions should and should not be acceptable from an antitrust perspective. We also compare these principles and the per se rules that follow from them to the potential benefits and drawbacks likely to be encountered under a rule of reason approach.

Keywords: Antitrust, patents, price fixing, licensing

JEL Classification: K21, L12, L24, L41

Suggested Citation

Maurer, Stephen M. and Scotchmer, Suzanne, Profit Neutrality in Licensing: The Boundary between Antitrust Law and Patent Law (June 26, 2006). UC Berkeley, Center for Competition Policy Working Paper No. CPC04-43, Available at SSRN: https://ssrn.com/abstract=503467 or http://dx.doi.org/10.2139/ssrn.503467

Stephen M. Maurer (Contact Author)

University of California, Berkeley ( email )

Berkeley, CA 94720
United States

Suzanne Scotchmer

University of California - Department of Economics (Deceased)

Berkeley, CA 94720-3880
United States

University of California, Berkeley - School of Law

215 Boalt Hall
Berkeley, CA 94720-7200
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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