'Excessive Royalty' Prohibitions and the Dangers of Punishing Vigorous Competition and Harming Incentives to Innovate

CPI Antitrust Chronicle, Vol. 4, No. 3, 2016

George Mason Law & Economics Research Paper No. 16-10

8 Pages Posted: 17 Mar 2016

See all articles by Douglas H. Ginsburg

Douglas H. Ginsburg

U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School, Faculty

Bruce H. Kobayashi

George Mason University - School of Law

Koren Wong-Ervin

Director of IP & Competition Policy at Qualcomm Incorporated and Senior Expert at China's University of International Business & Economics (formerly at the U.S. Federal Trade Commission)

Joshua D. Wright

George Mason University - Antonin Scalia Law School, Faculty

Date Written: March 15, 2016

Abstract

This article discusses the dangers of regulating royalties, including the difficult — if not impossible — task of determining whether a particular royalty is “excessive,” and suggest that agencies not apply to IPRs, including SEPs, their laws prohibiting excessive pricing. Should an agency be required by law to apply the prohibition to IPRs, then at the very least it should focus primarily upon the prices of comparable licenses, which are the best available evidence of the market value of a patent.

Keywords: comparable licenses, competition, excessive pricing prohibition, innovation, intellectual property right, IPRs, patent law, price regulation, royalties, standard-essential patents, SEPs, U.S. antitrust agencies

JEL Classification: K11, K21, K23

Suggested Citation

Ginsburg, Douglas H. and Kobayashi, Bruce H. and Wong-Ervin, Koren and Wright, Joshua D., 'Excessive Royalty' Prohibitions and the Dangers of Punishing Vigorous Competition and Harming Incentives to Innovate (March 15, 2016). CPI Antitrust Chronicle, Vol. 4, No. 3, 2016; George Mason Law & Economics Research Paper No. 16-10. Available at SSRN: https://ssrn.com/abstract=2748252

Douglas H. Ginsburg

U.S. Court of Appeals for the District of Columbia Circuit ( email )

333 Constitution Ave NW
Room 5523
Washington, DC 20001
United States

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Bruce H. Kobayashi

George Mason University - School of Law ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8034 (Phone)
703-993-8088 (Fax)

HOME PAGE: http://mason.gmu.edu/~bkobayas

Koren Wong-Ervin (Contact Author)

Director of IP & Competition Policy at Qualcomm Incorporated and Senior Expert at China's University of International Business & Economics (formerly at the U.S. Federal Trade Commission) ( email )

1730 Pennsylvania Ave N.W.
Suite 850
Washington DC, DC 20006-1850
United States

Joshua D. Wright

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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