Standards, Royalty Stacking and Collective Action

Abstract

This article summarizes economic and legal theories regarding royalty stacking in view of recent U.S. case law that has addressed the impact of stacking on the reasonableness of patent royalty rates. It critiques the Federal Circuit’s decision in Ericsson v. D-Link, holding that actual evidence of stacked payments must be proffered to support a jury instruction on stacking. It concludes with a proposal for reducing the impact of royalty stacking through collective royalty cap negotiation and a call for antitrust agencies to confirm that such negotiations would have pro-competitive benefits and be analyzed under a rule of reason standard.

Keywords: standards, FRAND, RAND, patent, stacking, antitrust, royalty, jury instruction