Applying the Nash Bargaining Solution for a Reasonable Royalty

TL;DR

This paper clarifies and normalizes the Nash Bargaining Solution to better apply it to intellectual property damages, providing a methodology, examples, and a nomograph for practical use.

Contribution

It introduces a normalized form of the NBS with a methodology for determining bargaining weights, facilitating its application to case-specific damages.

Findings

Normalized NBS form demonstrated with examples

Methodology for calculating bargaining weights provided

A nomograph for easy computation included

Abstract

There has been limited success applying the Nash Bargaining Solution (NBS) in assigning intellectual property damages due to the difficulty of relating it to the specific facts of the case. Because of this, parties are not taking advantage of Georgia-Pacific factor fifteen. This paper intends to bring clarity to the NBS so it can be applied to the facts of a case. This paper normalizes the NBS and provides a methodology for determining the bargaining weight in Nash's solution. Several examples demonstrate this normalized form, and a nomograph is added for computational ease.