The superiority of the restitutionary model in computation of reasonable royalties for patent infringement: a comparative discussion

This article argues that the restitutionary model of reasonable royalties, in the context of patent law, should be upheld and that the compensatory model should be dispensed with. The compensatory model of reasonable royalty computation appears to be the customary standard in the context of patent law. This model is, however, unsuitable for the peculiarities of the patent market as it encourages room for opportunism. It does so for the reasons that: (1) the model is founded on a hypothetical bargaining process; (2) the patent market is inherently characterised by information costs; and (3) patents are meant to promote utilitarian ends, not to promote property rights in inventions. However, the use of the restitutionary model obviates the incidence of opportunism and suits the purposes of patent law as it: (1) is suitable for the peculiarities of the patent market; and (2) simply determines reasonable royalties on the basis of the value of infringing engagements to the infringer