An Economic Analysis of Damages Rules in Intellectual Property Law

Posted: 1 Sep 1997

See all articles by Roger D. Blair

Roger D. Blair

University of Florida

Thomas F. Cotter

University of Minnesota Law School

Date Written: July 1997

Abstract

In this article, we apply economic analysis in an effort to derive the optimal damages rules for use in patent, trade secret, copyright, and trademark disputes. We proceed on the basis of two key assumptions: first, that in order to preserve the intellectual property owner's incentives to create, publish, or maintain quality control, the owner should never be rendered worse off as a result of an infringement; and second, that in order to preserve the property-like character of intellectual property rights, the infringer should never be rendered better off as a result of the infringement. On the basis of these assumptions, we conclude that the general damages rule for use in intellectual property disputes should be that the prevailing plaintiff recovers the greater of either her actual damages or the defendant's profits attributable to the infringement, with the possibility of a damages enhancement as a means of deterring infringements that are difficult to detect. We then discuss three ways in which the rules that actually govern in intellectual property disputes depart from this model--the absence of a restitutionary remedy in patent law; the use of "statutory damages" in copyright law; and the limitation on the recovery of restitutionary damages in trademark law- and consider whether these departures from the model can be viewed as rational adaptations to certain specific features of these bodies of law.

Suggested Citation

Blair, Roger D. and Cotter, Thomas F., An Economic Analysis of Damages Rules in Intellectual Property Law (July 1997). Available at SSRN: https://ssrn.com/abstract=11499

Roger D. Blair (Contact Author)

University of Florida ( email )

342 Matherly Hall
Gainesville, FL 32611-7140
United States
352-392-0179 (Phone)
352-392-7860 (Fax)

Thomas F. Cotter

University of Minnesota Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States
612-624-7527 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
1,734
PlumX Metrics