Retooling the Patent-Antitrust Intersection: Insights from Behavioral Economics

Posted by Social Science Research Network

Retooling the Patent-Antitrust Intersection: Insights from Behavioral Economics

By Daryl Lim (The John Marshall Law School)

Abstract:     Behavioral economics has been embraced in finance and implemented by the government. In IP law, scholars have argued it can inform non-obviousness analyses, decipher patent damages, and develop a more nuanced narrative for incentivizing innovation. In antitrust law, scholars have argued for a larger role for behavioral economics in antitrust law more generally. Yet to date, there has been no consideration of the role of behavioral economics at the patent-antitrust intersection.

In presenting pioneering work on the issue, this Article explains the role heuristics and biases play at the patent-antitrust intersection, and identifies specific ways that courts can take them into account. If antitrust law based on neoclassical economics were analogized to an app, behavioral economics would be a patch, not an overhaul of the status quo. A court that understands how patentees, licensees, consumers, and enforcers decide can more accurately contextualize and assess competing narratives and articulate more effective remedies. In other words, behavioral economics can help judges better understand how to use the rule of reason to achieve more dynamically efficient outcomes.

Through the lens of patents, Part II traces how the discretion given to courts in applying the rule of reason has empowered th…

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