An intellectual property case needs an economist once the damages will be decided on a reconstruction rather than read from the records: a reasonable royalty that has to be built from licenses and the profit the invention made possible, lost profits that depend on what buyers would have done without the infringing product, an infringer's profits claim whose deductions and apportionment are contested, or a trade secret claim whose value runs to the end of a head start. Counsel considering an economist should start with the accused products' sales data, the licenses in the record, and the dates that set the damages period, because the measure is built from them and each is often disputed.
Checklist
Identify the rights asserted, the accused products, and the remedies the claims seek: a royalty, lost profits, the infringer's profits, or unjust enrichment
Note the dates that set the damages period: the start of the infringement or misappropriation, any marking or notice, and the filing of the complaint
Gather the licenses to the rights in suit and any licenses for comparable technology the parties have signed
Ask for the accused products' unit sales, revenue, and cost data in the first discovery requests
Identify the technical and survey questions, such as design-arounds and the value of the patented feature, that other experts will answer
Questions to ask the economist
Which measures does the record support, and which one is likely to carry the claim?
Which licenses in the record are likely to be treated as comparable, and what adjustments will they need?
What sales and cost data do you need first to give a preliminary view of the damages?
How will the court's construction of the claims affect the accused products and the schedule?
Timeline
Two to three weeks from the first call to a preliminary view of the measures and the issues, once the pleadings, the licenses, and the first sales data are in hand. A full analysis follows the retention and records phases described on the services pages.
Required documents
The complaint, the asserted claims or the identified trade secrets, and any infringement contentions
Licenses to the rights in suit and to comparable technology, with the negotiation files
Unit sales, revenue, and cost data for the accused products and the owner's competing products
Marking, notice, and public disclosure records that bear on the damages period
Common pitfalls
Serving damages discovery before the economist has identified the sales, cost, and license records the measures need
Assuming lost profits are available without evidence of demand, substitutes, and the owner's capacity to make the added sales
Treating a royalty rate from an industry survey or a rule of thumb as a substitute for the licenses and the record of the case
When does an intellectual property case justify a testifying damages economist?
When the damages will be decided on a reconstructed measure rather than read from the records: a reasonable royalty built from licenses and the profit the invention made possible, lost profits that depend on the market without the infringer, or an infringer's profits claim with contested deductions and apportionment. A dispute over royalties owed under a license that the contract's own rate settles may need only an accounting of the licensee's sales.
Can an economist give a view of the damages before discovery is complete?
Yes, as consulting work. A preliminary review of the licenses, the public information on the accused products, and any sales data already produced can show which measures the record is likely to support, which records to request first, and where the other side is likely to press, before any decision about a testifying expert is made.
What does a preliminary damages review cost relative to a full report?
A preliminary review is a limited engagement built from the pleadings, the licenses, and the sales data in hand, so it costs far less than a full analysis, which adds the market and license analysis, the apportionment, the damages period, and the written report. The engagement letter states the fee basis for each phase, and counsel can stop after the review.
Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), modified and aff'd, 446 F.2d 295 (2d Cir. 1971). static.case.law