A Unified Framework for RAND and Other Reasonable Royalties

54 Pages Posted: 28 Sep 2014 Last revised: 25 Apr 2016

See all articles by Jorge L. Contreras

Jorge L. Contreras

University of Utah - S.J. Quinney College of Law

Richard Gilbert

University of California, Berkeley

Date Written: January 1, 2015

Abstract

The framework for calculating “reasonable royalty” patent damages has evolved over the years to a point at which, today, it is viewed by many commentators as potentially misleading and untethered from its original purpose. We offer a proposal to modify the framework for determining reasonable patent royalties that is based on recent scholarly and judicial analyses of standards-essential patents that are subject to commitments to license on terms that are reasonable and non-discriminatory (RAND). Litigated cases have applied the traditional Georgia-Pacific factors to assess RAND royalty rates with modifications to account for the circumstances of the RAND commitment. We propose that the reasonable royalty analysis should be conducted in essentially the same manner for all patents, whether or not they are encumbered by RAND commitments. We find considerable support for our approach in the historical development of U.S. patent law prior to the advent of the Georgia-Pacific test. Our approach focuses on the technical and economic characteristics of allegedly infringed patents and their incremental value to the overall product offering.

Keywords: patents, royalties, damages, standards, FRAND, SEP, Georgia-Pacific, reasonable royalty

JEL Classification: K1, O31, O34, O38

Suggested Citation

Contreras, Jorge L. and Gilbert, Richard, A Unified Framework for RAND and Other Reasonable Royalties (January 1, 2015). 30 Berkeley Technology Law Journal 1451 (2015); University of Utah College of Law Research Paper No. 91. Available at SSRN: https://ssrn.com/abstract=2502066 or http://dx.doi.org/10.2139/ssrn.2502066

Jorge L. Contreras

University of Utah - S.J. Quinney College of Law ( email )

383 S. University Street
Salt Lake City, UT 84112-0730
United States

Richard Gilbert (Contact Author)

University of California, Berkeley ( email )

Department of Economics
530 Evans Hall #3880
Berkeley, CA 94720
United States
510 642 1507 (Phone)

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