Monday, February 28, 2022

Noninfringing Alternatives and Wins Above Replacement

A recent article in the Wall Street Journal, titled "A Nerdy Baseball Stat Is Going Mainstream. The Wonks Aren’tHappy," discusses a statistic, created by baseball analysts for purposes of evaluating and comparing baseball players' performances, called "Wins Above Replacement" or "WAR."  Major League Baseball's website defines WAR as a measurement of "a player's value in all facets of the game by deciphering how many more wins he's worth than a replacement-level player at his same position (e.g., a Minor League replacement or a readily available fill-in free agent).  For example, if a shortstop and a first baseman offer the same overall production (on offense, defense and the basepaths), the shortstop will have a better WAR because his position sees a lower level of production from replacement-level players."  According to the Wall Street Journal article, discussions are underway about "creating a performance-based bonus pool of money for young players who don’t yet qualify for salary arbitration" that would involve tying payouts to a player's WAR.  The article also discusses some possible problems with using the statistic to determine compensation, among them that different stats organizations use different formulas to compute player WARs, and these organizations are not necessarily willing to bear responsibility for what players get paid.  I can imagine some interesting IP questions as well, among them whether the statistics themselves are subject to copyright protection; as I recall, the case law on copyright protection for statistics like these is rather confusing.

 All of this may seem to have absolutely nothing to do with patent remedies, but it occurs to me that the WAR statistic is conceptually very similar to the "noninfringing alternative" concept that plays such a big role in the U.S. law of patent damages.  As I discussed recently at the OxFirst webinar on patent damages calculations in the United States, for over a century U.S. courts have taken noninfringing alternatives into consideration for purposes of calculating monetary awards for patent infringement (as illustrated, for example, in cases such as  Grain Processing Corp. v. American Maize-Products Co., 185 F.3d 1341 (Fed. Cir. 1999)).  The basic logic is twofold.  First, if the defendant could have avoided infringement by employing a noninfringing alternative to the patented technology, and would have made some or all of the sales it actually made using the patented technology, the infringement did not cause the patentee to lose those sales.  Second, the economic value of a technology is the value it confers upon the user in excess of what the infringer would have earned using the next-best available noninfringing alternative.  Ignoring noninfringing alternatives therefore would place the patentee in a better position than it would have occupied, but for infringement, and would risk overcompensating the patentee for its contribution to the state of the art.  All of this is, as I said, pretty standard in U.S. law, and courts in Canada and France have employed it as well.  Nevertheless, courts in the U.K. so far have adhered to a nineteenth century precedent, United Horse-Shoe & Nail Co. v. John Stewart & Co., (1888) 5 RPC 260 (H.L.), which rejected the relevance of non-infringing alternatives to patent damages calculations; and even in the U.S., practical considerations may limit the applicability of the principle in other types of IP cases, such as copyright.  (For discussion, see my article on extraterritorial copyright damages here. Moreover, other policy considerations may limit its applicability in other bodies of law, as discussed by Professor Yelderman here.)  That said, the concept makes a lot of sense as an indicium of value, and so it's interesting to see something like it being deployed in another context for an analogous purpose.  Perhaps if they start applying it to compare cricket players, as well as baseball players, the concept will eventually make its way into English patent law . . .

Of course, as in the law of patent damages, there is often plenty of room for debate about exactly how to determine the value of something or someone over the next-best alternative (as the article points out in the baseball context, where estimates of individual players can differ substantially).  I imagine there also may be difficulties determining what or who the next-best alternative is, as in the patent-law context where my coauthors and I have noted the lack of any good answer (so far) to the question of how to calculate value when the next-best alternative is itself patented.  In the baseball context, is a minor-league ballplayer analogous to a nonpatented alternative?

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