Salant, David J (2007): Formulas for fair, reasonable and non-discriminatory royalty determination. Forthcoming in:
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This paper takes an axiomatic approach to determining “Fair, Reasonable, and Non-Discriminatory” (“FRAND”) royalties for intellectual property (“IP”) rights. Drawing on the extensive game theory literature on “surplus sharing/cost sharing” problems, I describe specific formulas for determining license fees that can be derived from basic fairness principles. In particular, I describe the Shapley Value, the Proportional Sharing Rule and the Nucleolus. The Proportional Sharing Rule has the advantage that it is the only rule that is invariant to mergers and splitting of the IP owners. I also explain why, at times, there may be no acceptable to solution. Further, I contrast these rules with the Efficient Component Pricing Rule (“ECPR”) suggested by Baumol and Swanson. Unlike, the ECPR, the rules identified in this paper can uniquely determine license fees when there is more than one owner of essential IP, and also incorporate various notions of fairness and equity.
|Item Type:||MPRA Paper|
|Original Title:||Formulas for fair, reasonable and non-discriminatory royalty determination|
|Keywords:||FRAND, Royalty Rates, Intellectual Property|
|Subjects:||O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O34 - Intellectual Property Rights
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L24 - Contracting Out; Joint Ventures; Technology Licensing
|Depositing User:||David Salant|
|Date Deposited:||05. May 2008 00:19|
|Last Modified:||11. Feb 2013 19:36|
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