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Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law

Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law We address the patent/antitrust conflict in licensing and develop three guiding principles for deciding acceptable terms of license. Profit neutrality holds that patent rewards should not depend on the rightholder’s ability to work the patent himself. Derived reward holds that the patentholder’s profits should be earned, if at all, from the social value created by the invention. Minimalism holds that licenses should not be more restrictive than necessary to achieve neutrality. We argue that these principles are economically sound and rationalize some key decisions of the twentieth century such as General Electric and Line Material. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Law and Economics Review Oxford University Press

Profit Neutrality in Licensing: The Boundary Between Antitrust Law and Patent Law

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Publisher
Oxford University Press
Copyright
© The Author 2006. Published by Oxford University Press on behalf of the American Law and Economics Association. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org
ISSN
1465-7252
eISSN
1465-7260
DOI
10.1093/aler/ahl013
Publisher site
See Article on Publisher Site

Abstract

We address the patent/antitrust conflict in licensing and develop three guiding principles for deciding acceptable terms of license. Profit neutrality holds that patent rewards should not depend on the rightholder’s ability to work the patent himself. Derived reward holds that the patentholder’s profits should be earned, if at all, from the social value created by the invention. Minimalism holds that licenses should not be more restrictive than necessary to achieve neutrality. We argue that these principles are economically sound and rationalize some key decisions of the twentieth century such as General Electric and Line Material.

Journal

American Law and Economics ReviewOxford University Press

Published: Jan 1, 2006

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