How Reasonable is the 'Reasonable' Royalty Rate? Damage Rules and Probabilistic Intellectual Property Rights

29 Pages Posted: 23 Aug 2006

See all articles by Jay Pil Choi

Jay Pil Choi

Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

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

Choi, Jay Pil, How Reasonable is the 'Reasonable' Royalty Rate? Damage Rules and Probabilistic Intellectual Property Rights (August 2006). CESifo Working Paper Series No. 1778, Available at SSRN: https://ssrn.com/abstract=926037 or http://dx.doi.org/10.2139/ssrn.926037

Jay Pil Choi (Contact Author)

Michigan State University - Department of Economics ( email )

101 Marshall Hall
East Lansing, MI 48824
United States
517-353-7281 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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