Anticompetitive Patent Injunctions

Anticompetitive Patent Injunctions

Injunctions, Hold-Up, and Patent Royalties

This paper studies royalty negotiations between a patent holder and a downstream firm selling a product which is more valuable if it includes a feature covered by the patent. Royalties are negotiated in the shadow of patent litigation, which will determine whether or not the patent is valid and infringed. If the two firms negotiate after the downstream firm has already designed its product to i...

Preliminary Injunctions and Damage Rules in Patent Law

This paper shows that preliminary injunctions may be sought in patent cases to obtain market power during the period of the injunction and are likely to be sought only where there is a small probability that the patent will be ultimately found valid. Both patentee and alleged infringer benefit from a preliminary injunction. This is an artifact of the asymmetry of current damage rules. Altering ...

The Supreme Court Rejects Automatic Permanent Injunctions in Patent Cases in eBay v. MercExchange

In eBay, Inc. v. MercExchange, LLC, ___ S.Ct. ___ (May 15, 2006), a unanimous United States Supreme Court abrogated the Federal Circuit’s “general rule” that a permanent injunction will issue once a patent is adjudged valid and infringed. In a concurring opinion for four of the eight Justices that considered eBay, Justice Kennedy singled out cases involving patent trolls and business method pat...

Are Exclusive Contracts Anticompetitive?

While antitrust law is often hostile to exclusive contracts that say ”you agree not to purchase this product from anyone besides me”, economic theory so far has provided only partial support for such a hostility.1 This paper shows that this hostility can be justified under more general circumstances than has been established so far in the literature: a firm may introduce exclusivity clauses in ...