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Damage rules and the patent hold-up problem : An analysis of Article L. 615-7

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Listed:
  • Bertrand Chopard
  • Thomas Cortade
  • Eric Langlais

Abstract

This paper provides an analysis of two damage rules (Lost Pro fit versus Unjust Enrichment) introduced in the French Code de la Propriété Intellectuelle in 2007 (Loi du 27 Octobre 2007, Art. L. 615-7). We use a simple sequential game where both the decisions to infringe and to enforce the patent, as well as the decisions to accomodate, settle or litigate the case, and the outputs decisions (Cournot competition) are endogenous. We characterize the equilibria associated with each rule, and compare their properties. We show that: 1/ the Unjust Enrichment rule provides Patentees with higher damages compensation than the Lost Pro fit one; however, 2/ Lost Profi t induces more deterrence of infringement, and is associated with less trials than Unjust Enrichment; 3/ Unjust Enrichment may deter the Patentee to enforce his right; 4/ when there is a positive probability that the case settles, Patentee's expected utility is higher under Lost Profi t than under Unjust Enrichment.

Suggested Citation

  • Bertrand Chopard & Thomas Cortade & Eric Langlais, 2013. "Damage rules and the patent hold-up problem : An analysis of Article L. 615-7," EconomiX Working Papers 2013-37, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2013-37
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    References listed on IDEAS

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    Cited by:

    1. Bertrand Chopard & Thomas Cortade & Eric Langlais, 2014. "On patent strength, litigation costs, and patent disputes under alternative damage rules," EconomiX Working Papers 2014-41, University of Paris Nanterre, EconomiX.

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    More about this item

    Keywords

    lost profi t rule; unjust enrichment rule; intellectual property rights; patent litigations; pretrial negotiations;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • K2 - Law and Economics - - Regulation and Business Law
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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