An economic model of patent exhaustion
| Autor: | Edwin L.-C. Lai, Ted M. Sichelman, Olena Ivus |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Transaction cost
First-sale doctrine Economics and Econometrics business.industry Strategy and Management 05 social sciences Social benefits ComputingMilieux_LEGALASPECTSOFCOMPUTING Social Welfare Intellectual property Intermediate level General Business Management and Accounting Incentive Commerce Patent troll Management of Technology and Innovation 0502 economics and business 050206 economic theory Economic model 050207 economics business License Industrial organization Downstream (petroleum industry) |
| Zdroj: | Journal of Economics & Management Strategy. 29:816-833 |
| ISSN: | 1530-9134 1058-6407 |
| DOI: | 10.1111/jems.12393 |
| Popis: | The doctrine of patent exhaustion implies that the authorized sale of patented goods “exhausts” the patent rights in the goods sold and precludes additional license fees from downstream buyers. Courts have considered absolute exhaustion, in which the patent owner forfeits all rights upon an authorized sale, and presumptive exhaustion, in which the patent owner may opt-out of exhaustion via contract. This paper offers the first economic model of domestic patent exhaustion that incorporates transaction costs in licensing downstream buyers and considers how the shift from absolute to presumptive exhaustion affects social welfare. We show that when transaction costs are high, the patent owner has no incentive to individually license downstream users, and absolute and presumptive exhaustion regimes are equivalent. But when transaction costs are at the intermediate level, the patent owner engages in mixed licensing, individually licensing high-valuation buyers and uniformly licensing low-valuation buyers. Presumptive exhaustion is socially optimal when social benefits from buyer-specific pricing outweigh social costs from transaction cost frictions in individualized licensing, which requires sufficiently low transaction costs. |
| Databáze: | OpenAIRE |
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