Meurer, Michael J. --- "Patent Litigation, Licensing, Nonobviousness, and Antitrust" [2010] ELECD 279; in Hylton, N. Keith (ed), "Antitrust Law and Economics" (Edward Elgar Publishing, 2010)

Book Title: Antitrust Law and Economics

Editor(s): Hylton, N. Keith

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847207319

Section: Chapter 11

Section Title: Patent Litigation, Licensing, Nonobviousness, and Antitrust

Author(s): Meurer, Michael J.

Number of pages: 20

Extract:

11 Patent litigation, licensing,
nonobviousness, and antitrust
Michael J. Meurer1


I Introduction
In early work on optimal patent design Nordhaus (1969) focused on selec-
tion of an optimal patent life, chosen to strike an appropriate balance
between the need to stimulate research and the desire to avoid monopo-
listic production of the invention. More recently, the scope (Gilbert and
Shapiro (1990) and Klemperer (1990)) and timing (Scotchmer and Green
(1990)) of the patent grant have also been studied as instruments of patent
policy. I investigate the same trade-off analyzed by Nordhaus but I con-
sider the instruments of patent validity and antitrust policy, and take
patent scope, timing, and life as given. The motivation for this choice is
that it is more representative of American patent policy than the use of
patent life as an instrument, and it allows me to explore the interaction of
patent litigation, output restriction, and the incentive to innovate, more
easily than if I considered patent scope or timing. In addition, the model
developed below captures many of the salient policy issues associated with
chemical or pharmaceutical product innovation.
A patent system in which all patents are valid and have a fixed term is
a crude method of promoting research. A patent is desirable in cases in
which it raises research expenditure in projects where investment would
be too small (relative to the social optimum), but it can also lead to exces-
sive research investment. The performance of the patent system could be
improved ...