Measuring The Impact Of Injunctive Relief On Innovation

By John M. Taladay

This article considers the impact of injunctions, or more specifically the lack of the availability of an injunction, on an innovator’s investment decisions. It concludes that: (1) it is possible to measure the impact that a “no injunction” in patent infringement actions will have on innovation investment, and that (2) such a policy will necessarily reduce investment in innovation. The reduction in investment is caused by the delay in receipt of licensing revenues that will result from eliminating the potential for injunctions, because this delay will negatively affect the inventor’s expected return on investment. The article also considers whether potential awards of interest in patent infringement actions, as an alternative to potential injunctions, will offset this effect and concludes that interest awards are inadequate to eliminate the reduced incentive to invest in innovation.