How Reasonable is the 'Reasonable' Royalty Rate? Damage Rules and Probabilistic Intellectual Property Rights
29 Pages Posted: 23 Aug 2006
Date Written: August 2006
Abstract
This paper investigates how different damage rules in patent infringement cases shape competition when intellectual property rights are probabilistic. I develop a simple model of oligopolistic competition to compare two main liability doctrines that have been used in the US to assess infringement damages - the unjust enrichment rule and the lost profit rule. It also points out the logical inconsistency in the concept of the "reasonable royalty rates" when intellectual property rights are not ironclad.
Keywords: probabilistic intellectual property rights, damage rules, reasonable royalty rates
JEL Classification: O3, L1, L4, D8, K4
Suggested Citation: Suggested Citation
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