Royalty Analysis

Classified as Confidential-Internal
 Patent Damages
• Lost profits
• Established Royalty
• Reasonable Royalty

Classified as Confidential-Internal
 Patent Damages
• 28 U.S.C. 284
Upon finding for the claimant the court shall award [] damages
adequate to compensate for the infringement, but in no event less
than a reasonable royalty . . . together with interest and costs . . .
[T]he court may increase the damages up to three times . . .

Classified as Confidential-Internal
 Reasonable Royalty
• Georgia-Pacific Hypothetical Negotiation
• Analytical Approach
Anticipated margin of accused product - Normal profit on similar products
• 25% Rule
• Nash Bargaining

Classified as Confidential-Internal
 Apportionment
• Identify the portion of the overall value of the product that is “attributable” to the patented
technology
• Determine the revenue base to which the royalty rate should be applied

Patented Features Non Patented Features

25%

75%

Classified as Confidential-Internal
 Apportionment - Royalty Base
• Entire Market Value (EMV)
• Invention is substantial basis of consumer demand for product
• Royalty base = entire value of accused product

• Smallest Saleable Unit (SSU) Value

• Apportion value of smallest saleable patent-practicing component
• Royalty base = cumulative value of smallest saleable components

Classified as Confidential-Internal
 Lucent Technologies v. Microsoft (2009)
• Patent claimed a method for entering information into fields on a
computer screen without using a keyboard
• Infringing Products-Microsoft Outlook
• Infringing Feature – Date picker

Classified as Confidential-Internal
 Lucent Technologies v. Microsoft (2009)
“There was no evidence that anybody anywhere at any time ever bought
Outlook . . . because it had a date picker.”

Classified as Confidential-Internal
 Reasonable Royalty

Reasonable
Royalty

Ongoing
Lump sum
Royalties
Classified as Confidential-Internal
 Discount Rate

Classified as Confidential-Internal
 Discount Rate
$ 100
??
Present Future
(2018) (2019)

Present Value = Future Value / (1 + Discount Rate)

= 100 /(1+0.1) = $ 90.9 = 100 /(1+0.2) = $ 83.3

Classified as Confidential-Internal
 Duration of the Damages period
35 U.S.C. § 286: the patentee cannot recover for any infringement committed more than
6 years prior to the filing of the infringement complaint

6 Years prior to filing suit / Notice Date Expiry Date

Date of Infringement
Commencement

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 Duration of the Damages period - Equitable
defense of laches

VS.

May 2010 November 2010 Expiry Date

(Before Black
Friday)
Classified as Confidential-Internal
 Duration of the Damages period - Equitable
defense of laches
• Strategically delayed filing suit until holiday shopping season
• Accrued Damages during peak sales
• Fossil asserted equitable defenses of laches
• Discourage patent holders from accruing Damages

Classified as Confidential-Internal
 Geography

Patent : US XXXXXXX

Global Infringing product sales

vs.
Infringing product sales in US

Classified as Confidential-Internal
 Infringing Product Sales
• Annual Reports
• Thomson One
• Free Resources Ex: Statista

Classified as Confidential-Internal