November 1, 2017
Legislative Affairs Office
General Coordination Division
Policy Planning and Coordination Department
Japan Patent Office
3-4-3 Kasumigaseki
Chiyoda-ku Tokyo 100-8915, Japan
Re: Comments on the Japan Guidelines for Licensing Negotiations Involving Standard-Essential Patents
Ladies and Gentlemen:
The Japan Patent Office (JPO) has invited public comments on proposed guidelines for licensing negotiations involving standard-essential patents (SEPs). I understand that the purpose of those guidelines is to “help prevent disputes involving SEPs and quickly resolve any disputes that do arise in global markets.” 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, as well as the publisher and founding editor of the Criterion Journal on Innovation launched in 2016. For the past 36 years, 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, and the Pacific. I have done extensive work in the area of SEPs: 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 at international conferences on FRAND matters and related topics. I also twice served as former Judge Richard Posner’s court-appointed neutral economic expert on patent damages in the U.S. District Court for the Northern District of Illinois pursuant to Federal Rule of Evidence 706.
I attach seven 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, Apportionment, FRAND Royalties, and Comparable Licenses After Ericsson v. D-Link, analyzes the principles that the Federal Circuit has developed in cases concerning FRAND-committed SEPs, including the selection of the royalty base, as well as the relevance that comparable license agreements have for the calculation of a FRAND royalty. The fourth article, A FRAND Contract’s Intended Third-Party Beneficiary, examines the rights that a FRAND commitment confers on a standard’s implementer, as a third-party beneficiary of a contract between an SEP holder and a standard‑setting organization (SSO). The fifth article, Fair and Unfair Discrimination in Royalties for Standard-Essential Patents Encumbered by a FRAND or RAND Commitment, examines how the U.S. jurisprudence on nondiscrimination provides common principles that can aid a court’s interpretation of an SSO’s nondiscrimination requirement. The sixth article, Is a FRAND Royalty a Point or a Range?, explains why Mr. Justice Colin Birss’ opinion in Unwired Planet does not support the general proposition that a FRAND royalty is a unique point rather than a range. The seventh article, Hedonic Prices and Patent Royalties, demonstrates how one can use hedonic price estimation to determine empirically whether a FRAND (or RAND) offer falls within the range of reasonable royalties created in a voluntary transaction between the SEP holder and the implementer.