Tuesday, May 31, 2016

Two Papers on Royalties

1.  Ryan Sullivan, DeForest McDuff, and Justin Skinner have published an article titled Downgrade To “Neutral”: A Diminishing Role Of The Georgia-Pacific Factors In Reasonable Royalty Analyses in the March 2016 edition of les Nouvelles (a publication of Licensing Executives Society International, which touts the article as its "article of the month").  Here is a link to the article.  From the introduction:
While rote recitation of the Georgia-Pacific factors was nearly a de facto standard for inclusion in reasonable royalty analyses, recent opinions of the Federal Circuit indicate otherwise. Because the Georgia-Pacific factors are neither mutually exclusive nor collectively exhaus­tive with respect to relevant economic issues, their utility in quantifying a reasonable royalty is inherently limited. In this article, we explore shortcomings and misapplications of the Georgia-Pacific factors as identi­fied by the Federal Circuit, indicating a diminishing role for the Georgia-Pacific factors in the future.
2. Anne Duchéne, Debapriya Sen, and Konstantinos Serfes have published an article titled Patent Licensing and Entry Deterrence:  The Role of Low Royalties, 82 Economica 1324-1348 (2015).  Here is the abstract: 
We study how an incumbent patent holder can use licensing strategically to reduce the threat of further entry, through a low royalty. This licensing strategy deters entry by making the terms of future licensing agreements less favourable to potential entrants. Strategic licensing induces a trade-off between a more concentrated market and a lower price. When this strategy is profitable for the patent holder, it is welfare enhancing if and only if the entry cost is high, or the efficiency edge of the technology is significant. Our analysis yields new policy implications (e.g. royalty floor) with respect to strategic licensing.

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