Friday, May 9, 2014

Recent Papers on the "Book of Wisdom," Calculation of Interest

Here are two new papers worth taking a look at:

1.  Judge Martha K. Gooding has just published a paper titled Reasonable Royalty Patent Damages:  A Proper Reading of the Book of Wisdom, Bloomberg BNA Patent, Trademark & Copyright Law Daily (Apr. 21, 2014) (behind a paywall).  For readers who aren't familiar with the term "book of wisdom," as I have explained elsewhere the term originated in Justice Brandeis's opinion in Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. 689, 698 (1933), and is used to refer to the practice of calculating royalties based in part on events that occurred after the date of the hypothetical negotiations between the willing licensor and willing licensee.  Judge Gooding's paper argues that, correctly understood, the book of wisdom approach permits a court to use ex post information only as circumstantial evidence of the ex ante information the parties would have considered during the hypothetical negotiations.  Her discussion provides a thorough review of the relevant case law and a critique of arguments that ex post information should be routinely admissible (what she calls the "all in" approach).  

For cites to some other papers Judge Gooding has published, see my November 8, 2013 post here. And, lest I forget, congratulations to Judge Gooding on her recent elevation to the bench; when I first met her last fall at Georgetown, she was a patent litigator at Jones, Day, and I wasn't aware until I read this paper the other day that she had become a judge of the California Superior Court.  All of her papers that I have read are worth reading, if you're interested in U.S. patent remedies law.

Finally, for some additional (brief) discussion of the book of wisdom in the U.S. and some possible parallels in German and Japanese law, see my book pages 67-68, 137 n.246, 266-67, 322-34.

2.  Eckart Bueren, Kai Hüschelrath, and Tobias Veith have a paper on ssrn titled Time is Money--How Much Money Is Time?  Interest and Inflation in Competition Law Actions for Damages.  Here is a link to the paper, and here is the abstract:
Public and private action against cartels is an internationally recognized cornerstone of antitrust enforcement. Effective private enforcement requires that cartel victims can receive (at least) full compensation for the harm suffered. Academics and competition authorities support this goal with guidance for the calculation of cartel damages. However, they usually neglect that the prosecution of competition law infringements can be very time-consuming, so that it often takes several years until cartel victims obtain damages. Interest and inflation are thus two key drivers of adequate compensation. This paper is the first to provide a comparative law and economics perspective on this topic: We investigate how various legal systems treat interest and inflation as part of competition law actions for damages, and, using real-world data from the lysine cartel, simulate the economic differences, which turn out to be substantial. By comparing and evaluating the regulatory techniques, our paper provides important insights for regulators, litigation practitioners and the ongoing reform discussions in the EU and the US. At the same time, our approach is a first step towards a quantitative comparative law and economics analysis of the law on interest in the field of tort law.
As indicated, the paper focuses on the availability and calculation of pre- and postjudgment interest in antitrust (competition law) matters.  Depending on the jurisdiction, these rules may be the same in patent cases or (as in the U.S.) they may be different in certain respects.  To whatever extent the rules applicable in competition law cases are applicable in other types of cases, however, the paper should be of interest to readers who are primarily interested in patent remedies.  

For discussion of interest in patent cases in the U.S., the Commonwealth, France, Germany, Japan, and South Korea, see my book pages 147, 209, 276-77, 328, and 370.  For further discussion of interest in patent cases in Canada, see this post, this post , and this post from Norman Siebrasse's Sufficient Description Blog. 

3.  Finally, although this has nothing specifically to do with patent remedies, I may as well take the opportunity to note the publication in Antitrust Source of two short papers, one by me and one by my former colleague and coauthor Roger Blair (coauthored with Christine Piette Durrance).  Mine is titled Patents, Antitrust, and the High Cost of Health Care, and the Blair-Durrance paper is titled Patents, Monopoly Pricing, and Antitrust in Health Care Markets.  Both are accessible here.

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