New Book from NERA Provides In-depth Analyses of Critical Intellectual Property Issues in a Time of Proliferating Patent Disputes

19 September 2005

Economic Approaches to Intellectual Property Policy, Litigation, and Management, a new book from NERA Economic Consulting, explores intellectual property issues that are more critical than ever in today's era of proliferating patents, high-stakes litigation, and global IP policy developments.

Co-edited by Dr. Gregory K. Leonard and Dr. Lauren J. Stiroh, the book consists of 23 articles by economists associated with NERA, whose analyses have played a crucial role in numerous landmark legal and regulatory cases. The volume discusses real-world tools and strategies at the forefront of economic thinking about many of today's most pressing intellectual property issues -- from how to determine "reasonable royalties" and IP damages to the protection of intellectual property rights in Japan and China.

"Over the past 35 years, the number of patents granted in the US alone has almost tripled, while research and development spending has doubled," remarked Dr. Stiroh. "Meanwhile, the number of patent lawsuits in the US has increased more than 25% since 1998. The dramatic growth in the value and importance of IP has converged with a rapidly globalizing economy to generate lucrative returns for companies that are successfully managing their intangible assets. But difficult questions remain for companies navigating the complex policies and legalities governing IP rights throughout the world. This book breaks down the economic issues for those attempting to understand our dynamic international IP environment."

Dr. Leonard added: "Economic Approaches to Intellectual Property explores the principles and implications of applying an economic perspective to intellectual property issues. In the past, the value of a patent was often determined using simple rules of thumb like the '25 percent rule' -- with damages or a reasonable royalty calculated simply as 25 percent of the profit associated with a patented feature. We go beyond the old thinking to show how properly to account for the economic complexities of the market in order to determine accurate and defensible IP value."

The book addresses such key questions as: How should the owner of IP rights be compensated when those rights are violated? What role should antitrust and competition policy play in intellectual property matters? How can companies more accurately assess their R&D investments and strategies? And: Should emerging economic powers implement and enforce more stringent intellectual property rights?

Major topic areas of the book include: "A Survey of Economic Knowledge Regarding Intellectual Property"; "The Basics of Intellectual Property Damages"; "Advanced Topics in Economic Analysis in Intellectual Property Litigation and Damages"; "The Intersection of Antitrust and Intellectual Property"; "Intellectual Property Rights Protection in Japan and China"; and "Issues in the Management of Intellectual Property Portfolios."

Articles in the book include, among others:

  • Applying Merger Simulation Techniques to Estimate Lost Profits Damages in Intellectual Property Litigation" reveals how techniques originally developed to assess the competitive effects of a corporate merger can be applied to measuring damages to patent owners whose IP has been infringed. 
  • "Essential Issues in the Competitive Analysis of Patent Pools" explores the debate over the practice of pooling related patent rights into a single license package in order to encourage commercial use of complex technology, such as the technology used to produce DVDs. When do patent pools confer additional market power? When do they lead to higher royalties for licensees?
  • "Standard Setting and Market Power" probes economic issues that govern royalty values for companies whose patents are incorporated in the industry standard for a given technology.
  • "Hedonic Characteristics in the Valuation of Intellectual Property" details how to assess the value of specific patented product features according to the degree to which each feature contributes to market demand for the product.
  • "When East Meets West" examines the new era of more rigorous intellectual property protection in Japan following comprehensive IP reforms in the late 1990s. Japan's legal system shows a more sophisticated awareness of the economics of IP valuation. As a result, damage awards and patent disputes have both increased.
  • "Intellectual Property Rights Protection in China: Litigation, Economic Damages, and Case Strategies" explains how China, spurred in part by pressure from the United States and European Union, is moving closer to the intellectual property rights practices and standards of Western nations.
  • "Antitrust Implications of Pharmaceutical Patent Litigation Settlements" asks and answers the question of under what conditions the settlement of a patent infringement lawsuit might be deemed anticompetitive -- particularly in regard to so-called "reverse payments" made by pharmaceutical patent owners to defendants.

Economic Approaches to Intellectual Property Policy, Litigation, and Management is now available on and carries a cover price of $29.95. Bulk orders may be placed at The book should prove to be vital reading not only for lawyers, but also for anyone concerned with IP issues and legal strategies -- from policy-makers to executives managing intellectual property portfolios to law and business school professors and students.

About NERA

NERA Economic Consulting ( is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For more than six decades, we have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world’s leading law firms and corporations. We bring academic rigor, objectivity, and real-world industry experience to issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA’s clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world’s largest economic consultancies. Continuing our legacy as the first international economic consultancy, NERA serves clients from major cities across North America, Europe, and Asia Pacific.