Contributory Infringement Rule and Patents

37 Pages Posted: 8 May 2007

See all articles by Corinne Langinier

Corinne Langinier

University of Alberta - Department of Economics

Philippe Marcoul

University of Alberta - Department of Rural Economy

Date Written: January 2007

Abstract

The contributory infringement rule assesses liability to a third party that contributes to the infringement of a patent. Not only are firms that directly infringe liable, those who indirectly contribute are also liable. We investigate how this rule affects the creation of a network of members (e.g., an e-commerce network). We find that the enforcement of indirect liability does not induce more trials in equilibrium. Firms settle out-of-court but, because of the threat of trial, the network size decreases and the social welfare is reduced. Surprisingly, we find that if the compensation paid by the indirect infringers is high, the rule does not benefit the patentholder and may not even give enough R&D incentives ex ante. It is possible to find a direct compensation for the patentholder that is socially preferable.

Keywords: Patents, Network, Infringement

JEL Classification: K11, K41, O34, D62

Suggested Citation

Langinier, Corinne and Marcoul, Philippe, Contributory Infringement Rule and Patents (January 2007). Available at SSRN: https://ssrn.com/abstract=984301 or http://dx.doi.org/10.2139/ssrn.984301

Corinne Langinier

University of Alberta - Department of Economics ( email )

8-14 Tory Building
Edmonton, Alberta T6G 2H4
Canada

Philippe Marcoul (Contact Author)

University of Alberta - Department of Rural Economy ( email )

Edmonton, Alberta
Canada

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