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Nash Bargaining Solution in Patents

Up until some years ago, the payment of intellectual properties was established by a rule of thumb called the “25% rule”, where 25% of the profit earned by the use of some intellectual property was paid to the owner of the patent and 75% was paid to the company that manufactures or deals with the patented item. In a 2006 case, a security company called Uniloc filed a patent lawsuit against Microsoft, and in this occasion the Federal Circuit decided not to use the 25% rule of thumb since it was not fair.

Some people have proposed using the Narsh Bargaining Solution instead, which in some cases might be adequate. The only problem with that is that it gives a 50-50 split of the incremental profits, and that’s not always fit to the cases. Because of that, some judges have classified the Nash Bargaining Solution as another rule of thumb, that ends up benefiting the patent owner. The good news is that a rule of thumb will stop being used and more alternative solutions will be given to particular cases. This is relevant to this class because sometimes the Narsh Bargaining Solution is not a fair transaction.

http://www.lexology.com/library/detail.aspx?g=ae095e46-e15b-4c24-8cff-463566e9e539

 

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