Resolving Bargaining Range Indeterminacy in Patent Damages After VirnetX

Abstract

Recent US federal court rulings have provided new guidance on the use of economic models of bargaining in estimating reasonable royalty damages in patent cases. After reviewing relevant case law and providing an overview of the bargaining range approach, we describe one analytic method (the Rubinstein Bargaining Model) for developing a quantitative starting point with which to divide a bargaining range and explain how it can be tied, at least in part, to the facts and circumstances of the parties around the time of the Hypothetical Negotiation. We also describe how this approach can be used in conjunction with an analysis of other quantitative and qualitative factors related to the bargaining power of the parties, to help estimate reasonable royalty damages.

Citation

Reed-Arthurs, R., Akemann, M.P. and Teece, D.J. (2021), "Resolving Bargaining Range Indeterminacy in Patent Damages After VirnetX ", Langenfeld, J., Fagan, F. and Clark, S. (Ed.) The Law and Economics of Patent Damages, Antitrust, and Legal Process (Research in Law and Economics, Vol. 29), Emerald Publishing Limited, Leeds, pp. 7-26. https://doi.org/10.1108/S0193-589520210000029002