The Law and Economics of Patent Damages, Antitrust, and Legal Process: Volume 29

This issue of Research in Law and Economics covers several areas of important research by a variety of international scholars. It contains technical papers on the appropriate way to estimate damages in patent disputes, as well as methods for evaluating relevant markets and vertically integrated firms when determining the competitive effects of mergers and other actions. There are also papers on the implication of different legal processes, regulations, and liability rules on consumer welfare, which range from the impact of delays in legal decisions in labor cases in France to issues of criminal liability related to the use of artificial intelligence.

Recent US federal court rulings have provided new guidance on the use of economic models of bargaining in estimating reasonable royalty damages in patent cases. After reviewing relevant case law and providing an overview of the bargaining range approach, we describe one analytic method (the Rubinstein Bargaining Model) for developing a quantitative starting point with which to divide a bargaining range and explain how it can be tied, at least in part, to the facts and circumstances of the parties around the time of the Hypothetical Negotiation. We also describe how this approach can be used in conjunction with an analysis of other quantitative and qualitative factors related to the bargaining power of the parties, to help estimate reasonable royalty damages.

When products are differentiated, applying the standard critical loss formula to assess whether it is profitable for a hypothetical monopolist to impose a common price increase can lead to delineating an antitrust market that is too broad by setting a critical loss threshold that is too low. This error is particularly likely to occur when the products exhibit very different per-unit profits, own price elasticities, and cross price elasticities. In particular, different per-unit profits are a necessary condition for this error to occur and this difference is more likely to be driven by an asymmetry in prices than by an asymmetry in costs when own price elasticities are moderate in magnitude. In contrast, differences in the quantity sold of each product do not tend to lead to errors in market definition. Given the issues associated with the standard critical loss analysis, critical loss analysis with asymmetric price increases and the gross upward pricing pressure index are practical alternative approaches for conducting market definition analysis when products in a candidate market are differentiated.

We examine a setting in which a vertically integrated provider (VIP) initially has a duty to deal with an independent rival at unregulated upstream and downstream prices. The duty to deal is subsequently terminated which enables the VIP to acquire the independent rival (or the expertise necessary to produce the rival's product) and then serve as a two-product monopolist in the downstream market. We find that the refusal to deal decreases rivalry but increases economic efficiency and is therefore presumptively “pro-competitive.” The paramount policy question concerns whether a refusal to deal that eliminates a rival and monopolizes the downstream market while increasing static efficiency should be considered a violation of Section 2 of the Sherman Act. This analysis also has implications for policies governing the unbundling of next-generation telecommunications networks.

We assess the impact of labor litigations on the ex post performance of firms. Using a sample of 44 French labor litigation cases, our empirical results confirm that the compensation amount requested by an employee has a significant and negative influence on the firm financial performance. Although that effect fades over time, it still remains significant four years after the employee has initiated the legal procedure. In addition, firms that have opted for a trial rather than a conciliation procedure improved their financial performance only in the first two years following the triggering of the litigation. That effect can be mainly explained by the long delays in the judgment of French labor courts. Our results contribute to the debate on the labor litigation impacts by assessing the financial opportunity of enacting pro-worker labor legislation dealing with employment redundancies.

After more than three decades of research and legal cases pursued by the European Commission (EC) and national regulators, interchange fees for four-party consumer card transactions are capped on December 9, 2015 across the European Union (EU). Since then, the development of card scheme fees has been a raising concern for merchants. Due to their nature, these fees have not been dealt with in research or covered by the Interchange Fee Regulation (IFR). This chapter aims to assess the recent development of card scheme fees within four-party card payment networks by relying on survey data obtained from 104 merchants across the EU. Findings show that for half of the merchant population card scheme fees have increased since the regulation. Further concerns related to transparency of fees, pass-through of savings to retailers and subsequently consumers, and the development of commercial cards are discussed. In light of the EC's scheduled review of the impacts of the policy intervention in 2019 (Article 17 of the IFR), this chapter evaluates alternative arrangements for the setting of card scheme fees with a focus on the legal basis for a potential regulation. Findings shall provide a ground for further interaction between academics, practitioners, and policymakers.

This paper is dedicated to the topic of the emerging challenges of traditional criminal law as posed by the development of modern technology. In certain parts of the world, the automotive industry has already implemented a new generation of autonomous self-driving vehicles. Moreover, there have been incidents where such vehicles have been involved in traffic accidents with deadly consequences. The use of autonomous intelligence is also emerging in other important sectors, such as in medicine and the military.

The issue of the legal liability of autonomous machines has been the subject of numerous philosophical debates and approached from the perspective of tort law. The question of criminal liability, however, has still not been debated more comprehensively. In this text, I will analyze the scope and limits of criminal liability of humans for criminal offenses “committed” by autonomous systems. Firstly, I will describe potential crimes of AI in context of intent and negligence. Secondly, I will propose the new concept of (shared) criminal liability, the concept I will name the Division of Labor theory.

The First Amendment affords protection to political speech on the basis of its high value. However, political speakers who make inflammatory statements on both sides of an issue do not advance political projects. An entity that purchases inflammatory social media advertising, for instance, both for and against gun control, and generates offsetting reactions simply raises the level of discursive conflict. This actor may be identified as a bad faith political speaker through relatively objective criteria. One-sided content producers, by contrast, even if they utter falsehoods and inflame discourse, cannot be so easily branded. The Gertz court, and First Amendment doctrine in general, correctly views this challenge as better handled outside of the courtroom. The novelty presented here is that evidence of two-sided content production can curtail the need for discretion and potentially close the door to many errors in judgment. Classifying two-sided inflammatory speech as low value is relatively easy to administer judicially, consistent with economic efficiency, and increases the political bargaining space by reducing discursive conflict. It also has the advantage of prohibiting egregious outside interference in an election without the need to identify the geographic origin of the disruption.