Memorandum on Standard-Essential Patents

J. Gregory Sidak

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March 30, 2016

Department of Industrial Policy and Promotion
Government of India
Minsitry of Commerce & Industry

Subject: Standard-Essential Patents

Ladies and Gentlemen:

The Department of Industrial Policy and Promotion of the Indian Ministry of Commerce and Industry (hereinafter the Ministry) has invited public comments on recommended revisions of its policy toward the enforcement of standard essential patents (SEPs). I respectfully submit my comments and suggestions.

My name is J. Gregory Sidak. I am the founder and chairman of Criterion Economics, L.L.C. in Washington, D.C. I am also a founding co-editor of the Journal of Competition Law & Economics, published quarterly by the Oxford University Press since 2005. For more than three decades, I have worked at the intersection of law and economics in academia, government, and private practice. As an expert economic consultant, I have served clients in the Americas, Europe, Asia, and the Pacific. I have done extensive work in the area of standard-essential patents: I have testified as an economic expert on issues regarding fair, reasonable, and nondiscriminatory (FRAND) licensing in various legal proceedings, I have published academic articles, and I have presented my research on FRAND matters and related topics at international conferences. I have also served as Judge Richard Posner’s court-appointed neutral economic expert on patent damages in the U.S. District Court for the Northern District of Illinois. With respect to this submission, I do not represent any party, and I have no economic interest in the adoption of any specific policy.

I attach eight articles that I have written in recent years that amplify the ideas expressed in my comments submitted herein. The first article, The Meaning of FRAND, Part I: Royalties, analyzes the economic methodology to determine a FRAND royalty for SEPs. The second article, The Proper Royalty Base for Patent Damages, analyzes the selection of the royalty base for the calculation of patent damages. The third article, Bargaining Power and Patent Damages, outlines a methodology that enables the finder of fact to determine the bargaining range and a point royalty for a hypothetical negotiation for a license for the infringed patent. The fourth article, Apportionment, FRAND Royalties, and Comparable Licenses After Ericsson v. D Link, analyzes the principles that the Federal Circuit developed in cases concerning FRAND committed SEPs, including the selection of the royalty base, as well as the relevance that the patent holdup and royalty stacking conjectures should have for the calculation of a FRAND royalty. The fifth article, The Meaning of FRAND, Part II: Injunctions, analyzes the SEP holder’s right to request and obtain an injunction against an infringer of an SEP. The sixth article, A FRAND Contract’s Intended Third Party Beneficiary, examines the rights that a FRAND contract confers on a standard’s implementer, as a third-party beneficiary of a FRAND commitment. I also analyze the principles that a court should apply when interpreting ambiguous terms of a FRAND commitment. The seventh article, Patent Holdup and Oligopsonistic Collusion in Standard-Setting Organizations, evaluates the risk of horizontal collusion within standard-setting organizations (SSOs). The eighth article, Evading Portfolio Royalties for Standard Essential Patents Through Validity Challenges, refutes the assumption that a licensee’s challenge to the validity of an SEP unambiguously benefits consumers.

My comments do not reflect the analysis of the opinion that the High Court of Delhi issued on March 30th, 2016 in Ericsson v. Competition Commission of India.  Nonetheless, I would welcome the opportunity to supplement my comments with an economic analysis of that decision, if the Ministry finds such addition appropriate. 

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