Reevaluating Patent Damages in the Knowledge Economy: The Intellectual Value Chain and the Royalty Base for Standard Essential Patents
Patent valuation is a complex and imprecise process exemplified by the long, contentious history regarding the determination of patent damages in U.S. jurisprudence. This process is made even more difficult as products increasingly undergo technology convergence and market actors deploy divergent business strategies to extract value from their intellectual property.1 This has led to an increase in patent litigation and a greater demand for courts to calculate patent value more accurately.2 U.S. courts have deployed several principles, including the use of the smallest saleable patent practicing unit (SSPPU) and the entire market value rule (EMVR) as a means to reduce the complexity when attempting to apportion patent value in multicomponent products.3 However, as these principles affect the determination of the royalty base, which can differ by orders of magnitude, the applicability of their use in different market contexts and norms requires investigation, because