Profits as Commercial Success

Citation data:

SSRN Electronic Journal

Publication Year:
2008
Usage 904
Abstract Views 839
Downloads 65
Captures 3
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SSRN
SSRN Id:
1763516
DOI:
10.2139/ssrn.1763516
Author(s):
Andrew Ralph Blair-Stanek
Publisher(s):
Elsevier BV
Tags:
patent; commercial success; secondary considerations; prospect theory; law and economics
article description
Courts often use the extent of a patented invention’s commercial success as crucial nontechnical proof of the patent’s validity. Relying on misguided economic reasoning, most courts use revenue as the primary yardstick for commercial success. This Note argues that courts instead should use profits as the proper measure of an invention’s commercial success. Current jurisprudence’s use of revenue reflects the flawed premise that firms maximize revenues rather than maximizing profits. As a result, courts will often find commercial success when the financial data suggest otherwise and vice versa. This Note finds the accounting and economic issues involved to be insubstantial, while requiring a threshold profit showing could materially further judicial economy.