We are back from the lunch break with our first panel of the afternoon from the Patent Law Institute. This afternoon’s panel is entitled, “Patent Damages – Keeping Up With the Changing Rules”. Our featured panelists are John Moehringer and Dawn Hall. The panel provides perspectives on the sea change in damages analysis, with focus on constructing/deconstructing a reasonable royalty case, proving lost profits and price erosion, and getting the most from your damages/economic expert. Here are the highlights:
Reasonable royalty is the minimum amount you can be compensated with, either in a lump sum or in a running royalty. You want to consider what would have been negotiated under the premise that both parties were showing their cards and both wanted to enter the negotiation. Georgia Pacific is a guide but not the rule, but this analysis is widely used. You take your royalty base and multiply it with your royalty rate and you will get your reasonable royalty. Your damages need to correlate with your infringement claim. What is key is for you to show your work! Your damages expert must build a record that matches the evidence in the rest of your case.
There may be a change in methodology for experts who used the 25% rule. Experts need to isolate the value of patented technology and find a way for the parties to arrive at a reasonable place. Avoid mismatching economic analysis or comparable licenses to the wrong royalty base. Be careful to not confuse the product aggregation level at which the royalty base is applied with the product aggregation level at which the royalty base was determined. Courts may invoke the entire market value rule in determining the royalty base.
A big case is the Cornell University v. Hewlett-Packard Co. where the jury verdict was reduced from $184 million to $53 million. Judge Rader held the damages should point to the smallest feature. Things like demand curves and surveys help develop evidence that the court would determine was satisfactory and helpful.
Tags: Dawn Hall, John Moehringer, Patent Damages, Patent Law Institute 2012, PLI
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