A Unified Framework for RAND and Other Reasonable Royalties
54 Pages Posted: 28 Sep 2014 Last revised: 25 Apr 2016
Date Written: January 1, 2015
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: Suggested Citation