The Royalty Stacking Supposition

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Richard Stark, Mar 16, 2015

It has become commonplace for serious people to assert in the SEP/FRAND context that the possibility of royalty stacking is an issue that must be addressed—a concern that threatens profits, progress, and competition itself. Interested parties around the globe are hard at work seeking to enact laws, rules, and policies to address royalty stacking. Frequently the changes sought involve interpretations of or provisions added to the intellectual property rights policies of standards setting organizations.

The European Commission’s DG-GROW issued a report on patents and standards in March 2014 noting a concern that “[t]he growing number of patents makes the problem of royalty stacking more prominent,” and outlining a number of possible measures for addressing that perceived problem. China’s Electronic Intellectual Property Center, an entity associated with the Ministry of Industry and Information Technology, released for comment in late 2014 a draft, non-binding template for the IPR policies of SSOs. One provision of the draft effectively seeks to define a FRAND royalty as one that takes into account “the total aggregate royalties that may apply if other owners of intellectual property demand similar terms.” In the United States, a number of judicial decisions have addressed royalty stacking, and the IEEE has now revised its IPR policy to recommend that reasonable royal…

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