Transfer Pricing Associates

Nash Bargaining

post Tuesday May 14, 2013

Throughout the recent history of intellectual property litigation, there have been a variety of precedents established for evaluating the amount of damages that should be awarded in a patent dispute. One major court case that ended the usage of the traditional 25 percent rule of thumb involved Uniloc v. Microsoft. This case ultimately lead to the dismissal of the 25 percent rule of thumb and has lead the various judges involved in IP law suits to become suspicious of other similar types of methods. Recently a new complimentary method, Nash Bargaining Solution, has received a similar fate. The Nash Bargaining Solution has been referenced in three different cases and has been largely useless in every single instance.
In Mformation Techs., Inc. v. Research in Motion Ltd, the Nash Bargaining Solution was used as a check and was not the backbone of the plaintiff’s case. In this case, the defendant appealed the decision but the courts ruled that the Nash Bargaining Solution was only utilized as a way to evaluate the damage assessments provided by the plaintiff and upheld the original ruling. In the case of Sanofi-Aventis Deutschland GmbH v. Glenmark Pharmaceuticals Inc, the court designated a 50/50 profit split but went on to comment that the 50/50 split was not an arbitrary rule of thumb that had been applied but was reached in the appropriate methods with a reasonable amount of investigation involved into the proper damages to be awarded, writing, “…reached that result after considering the facts of the case, specifically the relationship between the parties and their relative bargaining power, the relationship between the patent and the accused product, the standard profit margins in the industry, and the presumed validity of the patent.’’
When hardware and software giant Oracle used the Nash Bargaining Solution in their $6B damage request from Apple, it was swiftly dismissed by Judge Alsup. He even went so far as to say that the Nash Bargaining Solution would lead to a “miscarriage of justice” and would be intentionally cloaking underlying assumptions that he believed to be made in error.
Up to this point, the Nash Bargaining Solution has been ineffective and ignored at best and entirely dismissed at worse. The method has some positive attributes, but has seen very little success as a standalone method in the context of assessing and awarding damages in intellectual property disputes.
Source:BVR IP Blog
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