Methodologies for Calculating FRAND Damages: An Economic and Comparative Analysis of the Case Law from China, the European Union, India, and the United States

Jindal Global Law School Law Review, Fall 2017

George Mason Law & Economics Research Paper No. 17-28

34 Pages Posted: 15 Jun 2017 Last revised: 25 Jul 2017

Anne Layne-Farrar

Charles River Associates; Northwestern University

Koren W. Wong-Ervin

George Mason University, Scalia Law School - Global Antitrust Institute

Date Written: July 24, 2017

Abstract

In the last several years, courts around the world, including in China, the European Union, India, and the United States, have ruled on appropriate methodologies for calculating either a reasonable royalty rate or reasonable royalty damages on standard-essential patents (SEPs) upon which a patent holder has made an assurance to license on fair, reasonable and non-discriminatory (FRAND) terms. Included in these decisions are determinations about patent holdup, licensee holdout, the seeking of injunctive relief, royalty stacking, the incremental value rule, reliance on comparable licenses, the appropriate revenue base for royalty calculations, and the use of worldwide portfolio licensing. This article provides an economic and comparative analysis of the case law to date, including the landmark 2013 FRAND-royalty determination issued by the Shenzhen Intermediate People’s Court (and affirmed by the Guangdong Province High People’s Court) in Huawei v. InterDigital; numerous U.S. district court decisions; recent seminal decisions from the United States Court of Appeals for the Federal Circuit in Ericsson v. D-Link and CISCO v. CSIRO; the six recent decisions involving Ericsson issued by the Delhi High Court; the European Court of Justice decision in Huawei v. ZTE; and numerous post-Huawei v. ZTE decisions by European Union member states. While this article focuses on court decisions, discussions of the various agency decisions from around the world are also included throughout.

Keywords: Standard-essential patents, SEPs, FRAND, damages calculations, Europe, China, United Kingdom, India, holdup, holdout, royalty stacking

JEL Classification: K21, K33, L4

Suggested Citation

Layne-Farrar, Anne and Wong-Ervin, Koren W., Methodologies for Calculating FRAND Damages: An Economic and Comparative Analysis of the Case Law from China, the European Union, India, and the United States (July 24, 2017). Jindal Global Law School Law Review, Fall 2017 ; George Mason Law & Economics Research Paper No. 17-28. Available at SSRN: https://ssrn.com/abstract=2985073

Anne Layne-Farrar

Charles River Associates ( email )

1 South Wacker Drive
Suite 3400
Chicago, IL 60606
United States
312-377-9238 (Phone)

HOME PAGE: http://www.crai.com

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Koren W. Wong-Ervin (Contact Author)

George Mason University, Scalia Law School - Global Antitrust Institute ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
310-779-0982 (Phone)

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