October 16, 2014 Articles

Consumer Surveys and Other Market-Based Methodologies in Patent Damages

Changes in demand of analyses of patent damages may force "traditional" damages experts to give way to marketing experts and economists

By Shankar Iyer

Once validity and infringement of the patent in suit is assumed, the central inquiry in calculating economic damages is one of cause and effect. Indeed, patent damages analysis is not much more than a hunt for a principled causal relationship. To wit, it is this causal relationship that the damages expert is asked to summon in the counterfactual world that is Georgia Pacific. Courts recognize that this is easier said than done: "Determining a fair and reasonable royalty is often . . . a difficult chore, seeming often to involve more the talents of a conjurer than those of a judge." ResQNet.com v. Lansa, 594 F.3d 860 (Fed. Cir. 2010).

The chore becomes harder in the case of technologies that have many interworking components. The more complex a product or service, the more heightened the scrutiny of the evidentiary link between the patented invention and consumer demand. While it is tempting to attribute such scrutiny to the nature of twenty-first-century technology, note this lucid caution from the publication year of Mark Twain's Adventures of Huckleberry Finn:

The patentee . . . must . . . give evidence tending to separate or apportion the defendant's profits and the patentee's damages between the patented feature and the unpatented features, and . . . the profits and damages are to be calculated on the whole machine, for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature.

Garretson v. Clark, 111 U.S. 120 (1884).

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