Injunctions are uniquely key to innovation

Patents are certainly idiosyncratic, but they are also highly valuable and tradeable in commercial markets. The key feature of patents in this latter respect is that their value is uncertain ex ante. The value of a particular invention or discovery cannot be known until it is either integrated into the end-product that will be distributed to consumers or actually used by consumers. This uncertainty creates a need for patent holders to carefully structure their risk and reward calculus such that the commercialization of the invention can reasonably be expected to generate a profit (which in turn goes back to the initial incentives to even proceed with the expensive R&D process to create the invention in the first place). Particularly with highly complex innovations—such as in pharmaceuticals and technology—the degree of risk taking and the required investment of capital is large, and the foregone opportunities can be massive. As such, it will often be difficult or impossible to adequately calculate appropriate monetary damages for the unauthorized use of a patent, even if the ex post value of the patent is knowable. So while it will be necessary to establish damages for violations after the fact, it will nearly always be appropriate to award injunctions to deter ongoing violations and to allow the property owner to do their own value calculations based on their investments, sunk costs, and—critically—lost opportunities that were foregone in order to realize the particular invention.