TY  - JOUR
AU  - Schankerman,Mark
AU  - Scotchmer,Suzanne
TI  - Damages and Injunctions in the Protection of Proprietary Research Tools
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7086
PY  - 1999
Y2  - April 1999
UR  - http://www.nber.org/papers/w7086
L1  - http://www.nber.org/papers/w7086.pdf
N1  - Author contact info:
Mark Schankerman
Department of Economics, R.516
London School of Economics
Houghton Street
London WC2A 2AE
UK
Tel: 442079557518
E-Mail: M.Schankerman@lse.ac.uk

Suzanne Scotchmer
Department of Economics
Evans Hall
University of California
Berkeley, CA  94720-3880
Tel: 510/643-8562
Fax: 510/643-9657
E-Mail: scotch@berkeley.edu
AB  - Profit on proprietary research tools is determined partly by the remedies for infringement, such as damages and injunctions.  We investigate how damages under a liability rule and the opportunity for injunctions under a property rule can affect the incentives to develop research tools.  We show that the prevailing legal doctrine of damages under liability rule, called lost profit or reasonable royalty, suffers from a logical circularity which leads to an indeterminacy in permissible damages.  This can create insufficient incentives to develop research tools.  Incentives can be improved either by a property rule with injunctions or by a liability rule under the doctrine of unjust enrichment.
ER  -