Wednesday, September 20, 2017

Some New Articles on Patent Damages, Part 1

1.  Colleen Chien and Eric Schulman have posted a paper titled The Responsible Use of Comparative Licenses, forthcoming in the Texas Intellectual Property Law Journal.  Here is a link to the paper, and here is the abstract:
Over the last decade, courts have applied increasingly stringent standards to the evidence used to determine patent damages. While this has reduced the risk of awards untethered to the facts, the current focus on strictly comparable licenses that conform most closely to the naked patent, one-way, royalty-bearing "hypothetical license" specified by law has created its own problems, particularly in the valuation of individual patents incorporated into products with numerous inventions. The rejection of "semi-comparables"—transactions that deviate in some significant way from the terms of the hypothetical license—has led to distorted incentives, unpredictability, and the exclusion of the very transactions that best reflect the incremental value of the invention; those that are formed ex ante, but do not make the cut. We suggest that many of these problems could be avoided by a more inclusive but disciplined approach to reasonable royalty determinations that prioritizes objective evidence of a patent‘s incremental value even when reflected in traditionally excluded "semi-comparable" transactions like technology licenses and sales. Though courts have been reluctant to use semi-comparables because of a lack of objective information about their formation, we begin to address this void, drawing upon the collective wisdom of licensing lawyers we interviewed, the nearly two-decade-long career of one of us as a licensing lawyer, and studies of thousands of actual licenses. When a reasonable, evidence-based estimate or upper bound cannot be derived, we consider the limited use of tailored injunctions, assuming the other eBay elements are met.
2.  R. Scott Hiller, Scott J. Savage, and Donald M. Waldman have posted a paper on ssrn titled Using Aggregate Market Data to Estimate Patent ValueHere is a link to the paper, and here is the abstract:
Intellectual property and its protection is one of the most valuable assets for entrepreneurs and firms in the information economy. This article describes a relatively straightforward method for measuring patent value with aggregate market data and the BLP model. We apply the method to United States smartphones. The demand estimates and recovered marginal costs produce sensible simulations of equilibria prices and shares from several hypothetical patent infringements. In one simulation, the presence of near field communication on the dominant firm’s flagship smartphone results in a 26 percent increase in profits per phone. This estimate provides a starting point for establishing a reasonable royalty between the patent holder and the dominant firm in a hypothetical negotiation. 
3.  Lisa Larrimore Ouellette has posted a paper on ssrn titled Adjusting Patent Damages for Nonpatent Incentives, also forthcoming int he Texas Intellectual Property Law Journal.  Here is a link to the paper, and here is the abstract:
Nonpatent innovation policies—including direct spending on grants and procurement, innovation prizes, and R&D tax incentives—are a significant part of innovation policy in practice and are attracting growing attention from legal scholars. In some cases, innovation is most efficiently incentivized by using these policies as complements, but in others, allowing researchers to claim nonpatent incentives in addition to patent rewards results in overcompensation. There are a few potential solutions to this reward-stacking problem, including limiting the patentability of inventions that have received significant alternative rewards, or conditioning nonpatent transfers on some relinquishment of patent rights. This symposium contribution presents and evaluates an additional solution: reducing patent damages to account for the nonpatent rewards (including ex ante risk reduction) an invention has already received. Such an approach could improve not only the incentive side of innovation policy, but also the allocation side, by reducing deadweight loss while maintaining incentives to innovate. The ability of patent damages doctrine to help mediate between different bodies of innovation law is a benefit of recent proposals for patent damages reform that has thus far been overlooked.

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