tag:blogger.com,1999:blog-5202549570150301909.post8749375500913245739..comments2024-03-15T00:21:23.406-07:00Comments on Comparative Patent Remedies : Injunctive Relief and License Termination Clauses: Part 1 Thomas Cotterhttp://www.blogger.com/profile/07145440504421320263noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5202549570150301909.post-84307322281030807942013-08-21T13:28:32.995-07:002013-08-21T13:28:32.995-07:00My intuition is that the risk shifting effect is m...My intuition is that the risk shifting effect is marginal. Bremner says “Consequently, patent holders are more likely to increase up-front costs, possibly requiring the full price of the license to be paid up front, to hedge against the risk of invalidation by licensees later. When licensees lack the capital to pay higher up-front fees, fewer licensing agreements are formed, which makes it harder for inventors to recoup their costs.” This is only right if the patentee is unable to price-discriminate - if it can, the patentee won’t ask for royalties high enough that deal falls through. In your book you say “At the margin, some licensees may be priced out of the market, or at best will respond to the higher royalty rate by charging more and producing less.” That seems right to me, but as you say, it is only a marginal effect. In principle there may also be some effect due to differential risk aversion, but I expect this is also marginal if the licensees are companies. <br /><br />You also say, “In addition, the public may be worse off to the extent the mandatory term raises the cost to licensees of using patented technology.” I’m not sure I agree. If no challenge clauses are unenforceable, the licence costs per licence will be higher, but there will be fewer licences, as some of the initial licences are terminated when the patent is successfully challenged. On the assumption that the reason the patentee is raising its rates if no challenge clauses are unenforceable is to compensate for those lost royalties, these two effects should equal out, and the average cost of using the technology should be the same under either rule.Normanhttps://www.blogger.com/profile/17573687140337856397noreply@blogger.com