Layne-Farrar et al. on Royalties, FRAND-Committed Patent Bundling

1.  Anne Layne-Farrar, Gerard Llobet and Jorge Padilla have published a paper titled Patent Licensing in Vertically Disaggregated Industries: The Royalty Allocation Neutrality Principle in Communications & Strategies, no. 95, 3d quarter 2014, pp. 61-84.  Here is a link to the paper, and here is the abstract:

This paper investigates patent licensing in vertically disaggregated industries, where patent holders may license to upstream producers only, downstream producers only, or to both upstream and downstream producers. We consider whether consumer welfare will be greater if the patent holder's ability to license multiple parties along a production chain is restricted. We also analyse whether a policy that restricts licensing to upstream manufacturers constitutes appropriate public policy. These questions have significant policy implications. Under the legal doctrine of first sale, or patent exhaustion, a patent holder's ability to license multiple parties along a production chain is restricted. How and when such restrictions should be applied is a controversial issue, as evidenced by the US Supreme Court's granting certiorari in the Quanta case. Some commentators have even argued that refusing to license to upstream component manufacturers may constitute an abuse of dominance and thus infringe the competition laws. We find that under ideal circumstances how royalty rates are split along the production chain has no real consequence for social welfare. Even when we depart from ideal conditions, however, we still find no economic justification for restrictions of the patent holders' ability to license multiple parties or to license to downstream producers only. 

2.  Anne Layne-Farrar and Michael A. Salinger have posted a paper on ssrn titled Bundling of Rand-Committed Patents.  Here is a link to the paper, and here is the abstract:

We assess the implications of the literatures on bundling and tying and on patent bundling in particular for whether a company that makes a RAND (reasonable and non-discriminatory) commitment on a patent may license that patent only in a bundle with patents on which it has not made a RAND-commitment. Patent bundling/tying is a common practice that often has sound efficiency justifications, but forcing a licensee to accept a license on a patent it does not want to obtain a RAND-committed patent that it does want can be a way of circumventing the RAND-commitment. Mixed bundling, where the licensor offers licensees the option of taking a license to RAND-committed patents only or taking a license to the full portfolio, is the most straightforward solution. However, we argue that a licensor can nonetheless offer a RAND-committed patent only in a bundle with patents on which it has not made a RAND-commitment, provided that the royalty would be RAND for the RAND-committed patents alone. The patent owner cannot deduct the value of non-RAND-committed patents from the license fee from the bundle and argue that it has honored its RAND-commitment as long as the difference is RAND for the RAND-committed patents.