Proving Up Valuation In Patent Infringement Litigation

FindLaw columnist Eric Sinrod writes regularly in this section on legal developments surrounding technology and the internet.

Jury damages awards in patent infringement litigation can be quite large. And at times, they have been reversed or reduced on appeal. This raises the issue of how patent infringement damages can be proven or defeated in a way at trial that will stick.

This issue is addressed in a recent article in the Business Valuation Monitor by Grant Thorton, titled “Value Creation Perspectives for Corporate Executives and the Investment Community.” The article notes that a significant part of the value of a patent is the size of the royalty it can command. And, a core damages issue in cases is the method of apportioning the value of the subject patents.

Specifically, though patent infringement damages are suppose to be confined to a patented feature, damages potentially can be awarded to patented and unpatented elements if the patented portion causes the profits earned for the given product. It is in this area, obviously, that parties in litigation must focus their evidentiary efforts in seeking to prove up and disprove patent infringement damages on both sides of the litigation fence.

As the article points out, various forms of evidence can come into play here, such as customer data surveys regarding customer demand for patented elements, the lack or not of separate markets for patented an unpatented components, information about whether the patented component improves the unpatented product into which it is integrated in a major way, trade literature about whether the patented feature is important, and whether or not the patented and unpatented components together create a single outcome.

Plainly, providing such evidence in support or against patent infringement damages at trial can be expensive. But it is better to get it right on the front-end; otherwise, the desired result may not be achieved at trial, and even if it is, it could be thrown out on appeal.

Eric Sinrod is a partner in the San Francisco office of Duane Morris LLP () where he focuses on litigation matters of various types, including information technology and intellectual property disputes.http://www.duanemorris.com