FOCUS ON INTELLECTUAL PROPERTY ECONOMIC DAMAGES/LOST PROFIT ANALYSES
Editors for This Issue: Mark Zyla and Thomas Mannion
Intellectual Property Litigation Insights
Feature Article:
Strategic Considerations for Patent Infringement Damages Analysis
Jack Minnear and Troy R. Covington
The two common measures of patent infringement damages are: (1) lost profits and (2) a reasonable royalty rate. This discussion summarizes the generally accepted approaches and methods with regard to quantifying patent infringement economic damages. Also, this discussion reviews the various strategic decisions that the patentholder should consider when pursuing patent infringement litigation. These strategic decisions must be made by the patentee and the patentee's legal counsel. However, the litigation team's damages expert may provide meaningful input in the decision-making process. As with all litigation decisions, patent infringement strategic decisions should be based on the most complete information and the most comprehensive analysis available.
Copyright and Trademark Damages: Are Larger Awards on the Horizon?
James D. Nguyen and Jeffrey Simmons
Historically, patent infringement litigation claims have outnumbered both copyright and trademark infringement litigation claims. Also, the magnitude of patent infringement awards has been greater than the magnitude of both copyright and trademark infringement awards. However, the volume of copyright and infringement claims seems to be on the increase. In addition, the level of copyright and trademark infringement awards seems to be increasing. This discussion explains the reasons why copyrights and trademarks are becoming increasingly important in this information age. And, this analyzes the trends in intellectual property infringement litigation and summarizes the trends in copyright and trademark damages awards.
Estimating the Remaining Useful Life of Intellectual Property
David R. Bogus
Inherent in the typical economic analysis and/or valuation of an intellectual property is an estimation of the subject property remaining useful life. This discussion explains how the estimation of a remaining useful life is considered in each of the generally accepted intellectual property valuation approaches. This discussion further describes (1) the various methods that are commonly used to estimate the intellectual property remaining useful life and (2) the various factors that typically affect the intellectual property remaining useful life.
Case Study—Discount Rate for an Intellectual Property Lost Profits Analysis
Chip Brown
Estimating an appropriate discount rate is a necessary procedure in an intellectual property lost profits/economic damages analysis. In an intellectual property infringement matter, the lost profits are specific to the subject intellectual property. Accordingly, the discount rate should include the specific risk factors related to the intellectual property. The discount rate may also include the specific risks already incurred by the subject intellectual property owner/operator. This discussion explains the common procedures for estimating intellectual property discount rates, through the presentation of a case study. This case study presents a simplified illustrative example of different economic damages scenarios related to an intellectual property. Finally, this discussion considers the application of different discount rates to the damages analysis of (1) historical lost profits and (2) future lost profits.
Identifying a Preferred IP Damages Measure by Understanding the Differences Between "Lost Profits" and "Diminution in Business Value"
Michael A. Mullins
The lost profits damages measure and the diminution in business value damage measures can involve some very similar—as well as some very different—assumptions, inputs, and calculations. A practitioner with an understanding of the similarities and differences between these two damages measures can develop a basis to select the damages measure that best corresponds with a particular set of facts and circumstances.
Summary of the Factors Courts Have Considered Important When Determining a Reasonable Royalty Rate in Patent Infringement Litigation
Anna Kamenova
Two seminal cases in the patent infringement area are Georgia-Pacific Corp. v. US Plywood Corp. and Honeywell v. Minolta. Both of these cases highlight the factors the respective courts considered relevant in estimating a reasonable royalty rate in the determination of economic damages. This discussion (1) summarizes these various reasonable royalty rate factors and (2) explains how these factors affect the reasonable royalty rate selection.
Estimating Economic Damages in a Patent Infringement Analysis
Craig A. Jacobson
The issues of patent valuation and economic damages analysis have become more prevalent as intellectual property has become more recognized as a significant component of total corporate value. The large settlements and damage awards in several recent patent litigations exemplify how important intellectual property has become to many corporations. This discussion explains methods of estimating damages where intellectual property is infringed upon. It is important for corporate managers to obtain both professional legal advice and competent financial advice in order to effectively manage patent-related issues .
Intangible Assets Litigation Insights
Capital Blue Cross: Appeals Court Provides Guidance on Valuation of Insurance Contract Intangible Assets
Mark L. Zyla, Thomas E. Mannion, and Robert F. Reilly
Capital Blue Cross is an important case for valuation analysts since the Third Circuit provides meaningful guidance with respect to the valuation of insurance industry intangible assets. Outside of the immediate Blue Cross Blue Shield context, this case is important to valuation analysts since the Third Circuit provides meaningful guidance with respect to the general valuation of insurance industry intangible assets. Also outside of the immediate Blue Cross Blue Shield context, this case is important to valuation analysts because the Third Circuit provides guidance with regard to distinguishing any discrete intangible asset from an indivisible mass asset.
Attributes of the Effective Intangible Asset Valuation Report
Robert F. Reilly
Intangible asset valuation (and related economic analysis) reports are often prepared within a litigation or similar controversy environment. Intangible asset valuations are often relevant to controversies involving infringement, breach of contract, financial reporting disclosures, fraud and misrepresentation, shareholder oppression, lender liability, bankruptcy, income tax, gift and estate tax, property tax, solvency and insolvency, and other related issues. Of course, every analyst attempts to make every intangible asset valuation report clear, convincing, and cogent. This engagement reporting objective is particularly important within a litigation environment. First, this discussion summarizes the common attributes of the effective intangible asset valuation report. Second, this discussion summarizes common errors to avoid in the preparation of the intangible asset valuation report. And, third, this discussion summarizes the basic quality control procedures that analysts should perform before issuing the final, written intangible asset valuation opinion report. These topics are all discussed from a litigation support or dispute resolution perspective.
Financial Advisory Services Insights
Current Controversies Related to Fairness Opinions and "Independent" Financial Advisory Firms
Craig A. Jacobson
Fairness opinions opine on the fairness of a proposed transaction from a financial perspective. A fairness analysis is always performed from the perspective of a particular party or transaction participant. This perspective allows the financial adviser to answer the question: fairness to whom? Companies involved in a bankruptcy proceeding are particularly sensitive to obtaining fairness opinions before pursuing capital market transactions. Historically, fairness opinions were often provided by the deal investment banker—or by another professional services firm with an ongoing relationship with the opinion recipient. Recently, however, commentators have questioned the independence of such fairness opinion providers. This discussion summarizes the current issues related to transactional fairness opinions, including the need for "independent" independent financial advisers.
Willamette Management Associates Insights
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