Nestler Responds to Hellebrand on Rules of Thumb

In January 2015 and September 2014 I published posts relating to an ongoing debate in the German press between Anke Nestler and Ortwin Hellebrand regarding the appropriateness of using some sort of "rule of thumb" to determine the value of intellectual property rights.  In particular, I noted that Dr. Nestler "argues that a 25-33% division of expected profits from the use of a patent, converted into a running royalty based on a percentage of turnover, can be a useful guideline--not a hard and fast rule, as rejected in the Federal Circuit's 2011 Uniloc decision--taking into account all other relevant considerations such as the parties' preferences for risk-sharing, the expected contribution of other patents or trademarks to the product's profitability, and so on."  Mr. Hellebrand, by contrast, contends that "market-standard rates are more likely to accurately reflect the value of the technology, and to be more administrable in practice."  Dr. Nestler has now published a response to Mr. Hellebrand in the February 2015 issue of Mitteilungen der deutschen Patentanwälten (pp. 62-63), titled Ableitung von angemessenen Lizenzsätzen aus ökonomischer Perspektive?  Eine Replik auf Ortwin Hellebrand ("Derivation of Reasonable Royalties from an Economic Perspective?  A Reply to Ortwin Hellebrand").  The abstract reads (my translation from the German):

In a previous essay, Nestler addressed the derivation of licenses from an economic perspective.  Hellebrand took up and critiqued her observations.  With this reply, Nestler shows that Hellebrand's observations ostensibly concern a specific type of case (compensation for employee inventors), in which suitable licenses are present.  Nestler does not reject the use of comparable, market-standard licenses.  Her essay is intended for general cases in which there are no suitable comparable licenses.

Nestler argues that licenses that are appropriately comparable are often not available, and that the use of market-standard rates drawn from public sources can be misleading.

For a recent post on a French case that appears to apply a version of the 25% rule, see here.