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22 Alb. L.J. Sci. & Tech. 357 (2012)
A Game-Theoretic Model for Reasonable Royalty Calculation

handle is hein.journals/albnyst22 and id is 373 raw text is: A GAME-THEORETIC MODEL FOR REASONABLE ROYALTY CALCULATION Sebastian Zimmeek* ABSTRACT This article describes a hypothetical licensing negotiation for determining a reasonable royalty according to 35 U.S.C. § 284 as interpreted by Georgia-Pacific Corp. v. United States Plywood Corp. It connects the fifteen Georgia-Pacific factors to game theoretic bargaining solutions and microeconomic market models. The result is a comprehensive framework for a systematic reasonable royalty analysis. TABLE OF CONTENTS I. HYPOTHETICAL APPROACH ................................................. 359 II. FRAMEWORK OF THE HYPOTHETICAL NEGOTIATION ........... 361 A. Cooperative Bargaining Solutions .............................. 362 1. Nash Bargaining Solution ..................................... 362 2. Nash Bargaining Solution with Unequal Bargaining Pow er .................................................. 366 3. Kalai-Smorodinsky Bargaining Solution .............. 366 4. Egalitarian Bargaining Solution ........................... 369 B. Noncooperative Bargaining Solutions ........................ 369 1. Rubinstein Bargaining Solution ............................ 370 2. Rubinstein Bargaining Solution with Disagreem ent Payoffs ............................................ 373 C. Relationship Between Cooperative & Noncooperative Bargaining ........................................ 375 III. DETAILS OF THE HYPOTHETICAL NEGOTIATION .................. 375 *Google Research Fellow, University of California, Berkeley; M.S. (Computer Science), Columbia University, 2011; Dr. iur., Christian-Albrechts-University at Kiel School of Law, 2008; LL.M., University of California, Berkeley, 2006; First State Examination, Christian-Albrechts-University at Kiel School of Law, 2003. This article has greatly benefitted from the help of Professor Xi Chen (Computer Science Department, Columbia University) and Jie S. Li. 357

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