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Part III - Innovation Theory (II): Law and Economics

Published online by Cambridge University Press:  12 October 2017

Edited by
Stephen M. Maurer
Stephen M. Maurer
Affiliation:
University of California, Berkeley
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Summary

We investigate how liability rules and property rules protect intellectual property. Infringement might not be deterred under any of the enforcement regimes available. However, counterintuitively, a credible threat of infringement can actually benefit the patentholder. We compare the two doctrines of damages, lost profit (lost royalty) and unjust enrichment, and argue that unjust enrichment protects the patentholder better than lost royalty in the case of proprietary research tools. Both can be superior to a property rule, depending on how much delay is permitted before infringement is enjoined. For other proprietary products (end-user products, cost-reducing innovations), these conclusions can be reversed.

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On the Shoulders of Giants
Colleagues Remember Suzanne Scotchmer's Contributions to Economics
 , pp. 121 - 156
Publisher: Cambridge University Press
Print publication year: 2017

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References

References

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References

Adelman, Martin J., and Juenger, Friedrich K.. 1975. “Patent-Antitrust: Patent Dynamics and Field-of-Use Licensing,” 50 New York University Law Review 273–308.Google Scholar
American Bar Association Section of Antitrust Law. 2002. The Federal Antitrust Guidelines for the Licensing of Intellectual Property: Origins and Applications, 2nd ed. Chicago: ABA Publishing.Google Scholar
Areeda, Phillip E., and Hovenkamp, Herbert. 2003. Antitrust Law: An Analysis of Antitrust Principles and Their Application. New York: Aspen Publishers.Google Scholar
Baxter, William. 1966. “Legal Restrictions on Exploitation of the Patent Monopoly: An Economic Analysis,” 76 Yale Law Journal 267–370.CrossRefGoogle Scholar
Bork, Robert H. 1965. “The Rule of Reason and the Per Se Concept: Price Fixing and Market Division,” 74 Yale Law Journal 775–847.CrossRefGoogle Scholar
Bork, Robert H.. 1978. The Antitrust Paradox: A Policy at War With Itself. New York: Basic Books.Google Scholar
Bowman, William S. 1973. Patent and Antitrust Law: A Legal and Economic Appraisal. Chicago: University of Chicago Press.Google Scholar
Chisum, Donald S. 2003. Chisum on Patents: A Treatise on the Law of Patentability, Validity and Infringement. Newark, NJ, and San Francisco: Matthew Bender & Co.Google Scholar
Furth, Helmut F. 1958. “Price-Restrictive Patent Licenses Under the Sherman Act,” 71 Harvard Law Review 814–842.CrossRefGoogle Scholar
Gifford, Daniel J. 2002. “The Antitrust/Intellectual Property Interface: An Emerging Solution to an Intractable Problem,” 31 Hofstra Law Review 398–418.Google Scholar
Hovenkamp, Herbert, Janis, Mark D., and Lemley, Mark A.. 2004. IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law. New York: Aspen Publishers.Google Scholar
Kaplow, Lewis. 1984. “The Patent-Antitrust Intersection: A Reappraisal,” 97 Harvard Law Review 1813–912.CrossRefGoogle Scholar
Landes, William M., and Posner, Richard A.. 2003. The Economic Structure of Intellectual Property Law. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
O’Donoghue, Ted, Scotchmer, Suzanne, and Thisse, Jacques. 1998. “Patent Breadth, Patent Life and the Pace of Technological Progress,” 7 Journal of Economics and Management Strategy 1–32.Google Scholar
Patterson, Mark R. 2002. “When is Property Intellectual: The Leveraging Problem,” 73 Southern California Law Review 1133–60.Google Scholar
Rey, Patrick, and Tirole, Jean. 2006. “A Primer on Foreclosure.” In Armstrong, M. and Porter, R., eds., Handbook of Industrial Organization III. Amsterdam: Elsevier (forthcoming).Google Scholar
Schlicher, John W. 2000. Patent Law: Legal and Economic Principles. Eagan, MN: Thomson/West.Google Scholar
Scotchmer, Suzanne. 1991. “Standing on the Shoulders of Giants: Cumulative Research and the Patent Law,” 5 Journal of Economic Perspectives 29–41.CrossRefGoogle Scholar
Scotchmer, Suzanne. 2004. Innovation and Incentives. Cambridge, MA: MIT Press.Google Scholar
Shapiro, Carl. 2003. “Antitrust Limits to Patent Settlements,” 34 RAND Journal of Economics 391–411.CrossRefGoogle Scholar
Weinschel, Alan J. 2000. Antitrust-Intellectual Property Handbook. Little Falls, NJ: Glasser LegalWorks.Google Scholar
Arthur J. Schmitt Foundation v. Stockham Valves and Fittings, Inc., 292 F. Supp. 893 (N.D. Ala. 1966).Google Scholar
California Dental Assn. v. FTC, 526 U.S. 756 (1999).Google Scholar
Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872 (Fed. Cir. 1995).Google Scholar
Ethyl Gasoline Corp. v. U.S., 309 U.S. 436 (1940).Google Scholar
General Talking Pictures Corp. v. Western Electric Co., 305 U.S. 124 (1938).Google Scholar
Hensley Equip. Co., Inc. v. Esco Corp., 383 F.2d 252 (5th Cir. 1967).Google Scholar
Interstate Circuit v. U.S., 306 U.S. 208 (1939).Google Scholar
Morton Salt v. G.S. Suppiger Co., 314 U.S. 488 (1942).Google Scholar
Neal Report (White House Task Force Report on Antitrust Policy), Antitrust & Trade Regulation Reports 411 (Pt. 2) (1969).Google Scholar
Royal Industries v. St. Regis Paper Co., 420 F.2d 449 (9th Cir. 1969).Google Scholar
Shapiro v. General Motors Corp., 472 F. Supp. 636 (D. Md. 1979).Google Scholar
Statute of Monopolies, 21 Jam. I, c.3 (1623)(Eng.).Google Scholar
U.S. v. E.I. du Pont De Nemours & Co., 118 F. Supp. 41 (D. Del. 1953).Google Scholar
U.S. v. General Electric Co., 272 U.S. 476 (1926).Google Scholar
U.S. v. Line Material Co., 333 US 287 (1948).Google Scholar
Adelman, Martin J., and Juenger, Friedrich K.. 1975. “Patent-Antitrust: Patent Dynamics and Field-of-Use Licensing,” 50 New York University Law Review 273–308.Google Scholar
American Bar Association Section of Antitrust Law. 2002. The Federal Antitrust Guidelines for the Licensing of Intellectual Property: Origins and Applications, 2nd ed. Chicago: ABA Publishing.Google Scholar
Areeda, Phillip E., and Hovenkamp, Herbert. 2003. Antitrust Law: An Analysis of Antitrust Principles and Their Application. New York: Aspen Publishers.Google Scholar
Baxter, William. 1966. “Legal Restrictions on Exploitation of the Patent Monopoly: An Economic Analysis,” 76 Yale Law Journal 267–370.CrossRefGoogle Scholar
Bork, Robert H. 1965. “The Rule of Reason and the Per Se Concept: Price Fixing and Market Division,” 74 Yale Law Journal 775–847.CrossRefGoogle Scholar
Bork, Robert H.. 1978. The Antitrust Paradox: A Policy at War With Itself. New York: Basic Books.Google Scholar
Bowman, William S. 1973. Patent and Antitrust Law: A Legal and Economic Appraisal. Chicago: University of Chicago Press.Google Scholar
Chisum, Donald S. 2003. Chisum on Patents: A Treatise on the Law of Patentability, Validity and Infringement. Newark, NJ, and San Francisco: Matthew Bender & Co.Google Scholar
Furth, Helmut F. 1958. “Price-Restrictive Patent Licenses Under the Sherman Act,” 71 Harvard Law Review 814–842.CrossRefGoogle Scholar
Gifford, Daniel J. 2002. “The Antitrust/Intellectual Property Interface: An Emerging Solution to an Intractable Problem,” 31 Hofstra Law Review 398–418.Google Scholar
Hovenkamp, Herbert, Janis, Mark D., and Lemley, Mark A.. 2004. IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law. New York: Aspen Publishers.Google Scholar
Kaplow, Lewis. 1984. “The Patent-Antitrust Intersection: A Reappraisal,” 97 Harvard Law Review 1813–912.CrossRefGoogle Scholar
Landes, William M., and Posner, Richard A.. 2003. The Economic Structure of Intellectual Property Law. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
O’Donoghue, Ted, Scotchmer, Suzanne, and Thisse, Jacques. 1998. “Patent Breadth, Patent Life and the Pace of Technological Progress,” 7 Journal of Economics and Management Strategy 1–32.Google Scholar
Patterson, Mark R. 2002. “When is Property Intellectual: The Leveraging Problem,” 73 Southern California Law Review 1133–60.Google Scholar
Rey, Patrick, and Tirole, Jean. 2006. “A Primer on Foreclosure.” In Armstrong, M. and Porter, R., eds., Handbook of Industrial Organization III. Amsterdam: Elsevier (forthcoming).Google Scholar
Schlicher, John W. 2000. Patent Law: Legal and Economic Principles. Eagan, MN: Thomson/West.Google Scholar
Scotchmer, Suzanne. 1991. “Standing on the Shoulders of Giants: Cumulative Research and the Patent Law,” 5 Journal of Economic Perspectives 29–41.CrossRefGoogle Scholar
Scotchmer, Suzanne. 2004. Innovation and Incentives. Cambridge, MA: MIT Press.Google Scholar
Shapiro, Carl. 2003. “Antitrust Limits to Patent Settlements,” 34 RAND Journal of Economics 391–411.CrossRefGoogle Scholar
Weinschel, Alan J. 2000. Antitrust-Intellectual Property Handbook. Little Falls, NJ: Glasser LegalWorks.Google Scholar
Arthur J. Schmitt Foundation v. Stockham Valves and Fittings, Inc., 292 F. Supp. 893 (N.D. Ala. 1966).Google Scholar
California Dental Assn. v. FTC, 526 U.S. 756 (1999).Google Scholar
Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872 (Fed. Cir. 1995).Google Scholar
Ethyl Gasoline Corp. v. U.S., 309 U.S. 436 (1940).Google Scholar
General Talking Pictures Corp. v. Western Electric Co., 305 U.S. 124 (1938).Google Scholar
Hensley Equip. Co., Inc. v. Esco Corp., 383 F.2d 252 (5th Cir. 1967).Google Scholar
Interstate Circuit v. U.S., 306 U.S. 208 (1939).Google Scholar
Morton Salt v. G.S. Suppiger Co., 314 U.S. 488 (1942).Google Scholar
Neal Report (White House Task Force Report on Antitrust Policy), Antitrust & Trade Regulation Reports 411 (Pt. 2) (1969).Google Scholar
Royal Industries v. St. Regis Paper Co., 420 F.2d 449 (9th Cir. 1969).Google Scholar
Shapiro v. General Motors Corp., 472 F. Supp. 636 (D. Md. 1979).Google Scholar
Statute of Monopolies, 21 Jam. I, c.3 (1623)(Eng.).Google Scholar
U.S. v. E.I. du Pont De Nemours & Co., 118 F. Supp. 41 (D. Del. 1953).Google Scholar
U.S. v. General Electric Co., 272 U.S. 476 (1926).Google Scholar
U.S. v. Line Material Co., 333 US 287 (1948).Google Scholar
Adelman, Martin J., and Juenger, Friedrich K.. 1975. “Patent-Antitrust: Patent Dynamics and Field-of-Use Licensing,” 50 New York University Law Review 273–308.Google Scholar
American Bar Association Section of Antitrust Law. 2002. The Federal Antitrust Guidelines for the Licensing of Intellectual Property: Origins and Applications, 2nd ed. Chicago: ABA Publishing.Google Scholar
Areeda, Phillip E., and Hovenkamp, Herbert. 2003. Antitrust Law: An Analysis of Antitrust Principles and Their Application. New York: Aspen Publishers.Google Scholar
Baxter, William. 1966. “Legal Restrictions on Exploitation of the Patent Monopoly: An Economic Analysis,” 76 Yale Law Journal 267–370.CrossRefGoogle Scholar
Bork, Robert H. 1965. “The Rule of Reason and the Per Se Concept: Price Fixing and Market Division,” 74 Yale Law Journal 775–847.CrossRefGoogle Scholar
Bork, Robert H.. 1978. The Antitrust Paradox: A Policy at War With Itself. New York: Basic Books.Google Scholar
Bowman, William S. 1973. Patent and Antitrust Law: A Legal and Economic Appraisal. Chicago: University of Chicago Press.Google Scholar
Chisum, Donald S. 2003. Chisum on Patents: A Treatise on the Law of Patentability, Validity and Infringement. Newark, NJ, and San Francisco: Matthew Bender & Co.Google Scholar
Furth, Helmut F. 1958. “Price-Restrictive Patent Licenses Under the Sherman Act,” 71 Harvard Law Review 814–842.CrossRefGoogle Scholar
Gifford, Daniel J. 2002. “The Antitrust/Intellectual Property Interface: An Emerging Solution to an Intractable Problem,” 31 Hofstra Law Review 398–418.Google Scholar
Hovenkamp, Herbert, Janis, Mark D., and Lemley, Mark A.. 2004. IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law. New York: Aspen Publishers.Google Scholar
Kaplow, Lewis. 1984. “The Patent-Antitrust Intersection: A Reappraisal,” 97 Harvard Law Review 1813–912.CrossRefGoogle Scholar
Landes, William M., and Posner, Richard A.. 2003. The Economic Structure of Intellectual Property Law. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
O’Donoghue, Ted, Scotchmer, Suzanne, and Thisse, Jacques. 1998. “Patent Breadth, Patent Life and the Pace of Technological Progress,” 7 Journal of Economics and Management Strategy 1–32.Google Scholar
Patterson, Mark R. 2002. “When is Property Intellectual: The Leveraging Problem,” 73 Southern California Law Review 1133–60.Google Scholar
Rey, Patrick, and Tirole, Jean. 2006. “A Primer on Foreclosure.” In Armstrong, M. and Porter, R., eds., Handbook of Industrial Organization III. Amsterdam: Elsevier (forthcoming).Google Scholar
Schlicher, John W. 2000. Patent Law: Legal and Economic Principles. Eagan, MN: Thomson/West.Google Scholar
Scotchmer, Suzanne. 1991. “Standing on the Shoulders of Giants: Cumulative Research and the Patent Law,” 5 Journal of Economic Perspectives 29–41.CrossRefGoogle Scholar
Scotchmer, Suzanne. 2004. Innovation and Incentives. Cambridge, MA: MIT Press.Google Scholar
Shapiro, Carl. 2003. “Antitrust Limits to Patent Settlements,” 34 RAND Journal of Economics 391–411.CrossRefGoogle Scholar
Weinschel, Alan J. 2000. Antitrust-Intellectual Property Handbook. Little Falls, NJ: Glasser LegalWorks.Google Scholar

Case and Statutory References

Arthur J. Schmitt Foundation v. Stockham Valves and Fittings, Inc., 292 F. Supp. 893 (N.D. Ala. 1966).Google Scholar
California Dental Assn. v. FTC, 526 U.S. 756 (1999).Google Scholar
Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872 (Fed. Cir. 1995).Google Scholar
Ethyl Gasoline Corp. v. U.S., 309 U.S. 436 (1940).Google Scholar
General Talking Pictures Corp. v. Western Electric Co., 305 U.S. 124 (1938).Google Scholar
Hensley Equip. Co., Inc. v. Esco Corp., 383 F.2d 252 (5th Cir. 1967).Google Scholar
Interstate Circuit v. U.S., 306 U.S. 208 (1939).Google Scholar
Morton Salt v. G.S. Suppiger Co., 314 U.S. 488 (1942).Google Scholar
Neal Report (White House Task Force Report on Antitrust Policy), Antitrust & Trade Regulation Reports 411 (Pt. 2) (1969).Google Scholar
Royal Industries v. St. Regis Paper Co., 420 F.2d 449 (9th Cir. 1969).Google Scholar
Shapiro v. General Motors Corp., 472 F. Supp. 636 (D. Md. 1979).Google Scholar
Statute of Monopolies, 21 Jam. I, c.3 (1623)(Eng.).Google Scholar
U.S. v. E.I. du Pont De Nemours & Co., 118 F. Supp. 41 (D. Del. 1953).Google Scholar
U.S. v. General Electric Co., 272 U.S. 476 (1926).Google Scholar
U.S. v. Line Material Co., 333 US 287 (1948).Google Scholar

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