Economic comparability may be evaluated by going through the Georgia-Pacific factors to compare and contrast the circumstances of the hypothetical negotiation and the prior agreement. Īn important foundational requirement for basing a reasonable royalty on a prior license agreement is demonstrating sufficient economic and technological comparability of the prior license agreement under circumstances that tend to confirm that the value of the patented technology was considered and “apportioned” in the agreed royalty. ![]() Hughes Network Sys., LLC, and Bio-Rad Labs., Inc. Examples of this are found in the Federal Circuit decisions in Commonwealth Sci. Thus, where a prior license agreement is reached in circumstances that are sufficiently comparable to the hypothetical negotiation of an asserted patent, the Federal Circuit recognizes that apportionment is effectively “baked into” the prior license agreement, and the agreed royalty may be used or adopted without further apportionment. In other words, the parties to a license agreement have inherently considered and accounted for the value of the patented technology in agreeing on what royalty will be paid for the right to manufacture or sell the licensed product. When reasonable royalty rates are calculated by reference to prior license agreements, the Federal Circuit has recognized the interesting and compelling reality that in the prior license agreements, the parties have usually inherently agreed upon the value of the patented technology in the agreed royalty base and rate. Apportionment from Prior Comparable License Agreements.This last scenario has been the focus of recent Federal Circuit decisions, as discussed further below. Where there are sufficiently comparable licensing agreements from which a reasonable royalty base and rate can be derived, then further apportionment may not be required at all. However, even after apportioning the royalty base down to the SSPPU, further apportionment may be required where the SSPPU has non-patented elements of value. One method of apportionment is to reduce the royalty base to the smallest saleable patent practicing unit (SSPPU) contained within the accused product. On the other hand, when the accused product has elements of market value that are not attributable to the patented technology, then apportionment is required. If the patented technology can be credited as embodying the entire market value of the accused infringing product, i.e., when the patented technology is shown to be the entire basis for customer demand, then no apportionment is required under the “entire market value rule” or EMVR. In addressing the issue of apportionment in analysis of the Georgia-Pacific factors, the Federal Circuit has adopted a few rules for certain fact patterns. In claims for reasonable royalty damages, apportionment typically comes into play as part of the hypothetical negotiation analysis set forth in Georgia-Pacific Corp. One purpose is to ensure that an award of damages for patent infringement is commensurate with the “claimed invention’s footprint in the marketplace.” When the patented technology is an improvement over existing technology, then another purpose of apportionment is to ensure that an award of damages reflects the “incremental value that the patented invention adds to the end product.” These purposes are apparent from the reasonable royalty provision in the Patent Act which requires that the “court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer….” It has articulated several purposes for requiring apportionment. The Federal Circuit has followed suit and required apportionment in calculation of reasonable royalty damages. ![]() Clark where the Court stated that 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.” The concept was introduced over 130 years ago by the United States Supreme Court decision in Garretson v. Background Regarding Apportionment in Patent LitigationĪpportionment is a patent damages concept that refers to an evaluation of the extent to which patented technology contributes to the value of an accused infringing product or process.This article reviews some recent Federal Circuit decisions regarding use of comparable license agreements to establish a reasonable royalty and prove apportionment, and raises some questions that arise from such decisions. The Federal Circuit has recently focused on the use of comparable prior license agreements to suggest a royalty base and rate and to satisfy the requirement of apportionment. In patent litigation, the adequacy of proof of apportionment in reasonable royalty damage claims is often a challenging issue that is hotly contested by the parties.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |