Puzzles of the Zero-Rate Royalty

Patentees increasingly exploit their intellectual property rights through royalty-free licensing arrangements. Even though patentees using such frameworks forfeit their right to trade patents for monetary gain, royalty-free arrangements can be used to pursue other significant commercial and collaborative interests. This Article argues that modern royalty-free structures generate tension between various otherwise well-accepted doctrines of patent remedies law that were designed for more traditional licensing models. As such, current doctrines provide conflicting frameworks for evaluating the royalty-free arrangement, and offer inconsistent approaches for determining the appropriate remedy for their breach.

This discord grows out of courts’ inadequate attention to non-monetary consideration in licensing transactions, and how such non-monetary obligations have been used to structure the licensing relationship and broader collaborative efforts.