Article | Journal of Law, Economics & Organization | spring 2007

Finding Lost Profits: An Equilibrium Analysis of Patent Infringement Damages

by James J. Anton and Dennis A. Yao

Abstract

We discuss how a seller can appropriate rents when selling knowledge that lacks legal property rights by solving either an expropriation or a valuation problem and then analyze how seller rents increase when a portion of the intellectual property (IP) can be protected. The analysis shows that a sequential strategy in which the protected portion of the IP is sold prior to selling the unprotected IP is superior to selling both portions of the IP as a bundle.

Keywords: Profit; Patents; Management Analysis, Tools, and Techniques; Knowledge; Rights; Strategy; Valuation; Problems and Challenges;

Citation:

Anton, James J., and Dennis A. Yao. "Finding Lost Profits: An Equilibrium Analysis of Patent Infringement Damages." Journal of Law, Economics & Organization 23, no. 1 (spring 2007): 186–207. (Harvard users click here for full text.)