Trial testimony in an intellectual property case presents the damages to a jury or a judge, usually after the liability evidence. The economist explains the measure the statute provides first, then the evidence behind it: for a reasonable royalty, the hypothetical negotiation, the licenses, the profit the protected feature made possible, and the alternatives that bound the bargain; for lost profits, the market, the substitutes, and the owner's capacity; for the infringer's profits, the revenue, the deductions, and the apportionment. Demonstratives should show the royalty base and the rate as separate steps and the result under the other side's choices, so the fact finder can see where the experts differ.
Checklist
Prepare a board of the royalty base, the apportionment, and the rate as separate steps
Prepare a board of the licenses relied on, with the differences each adjustment addresses
Prepare the reconciliation of the two experts' results, choice by choice
Prepare the result under the opposing base, licenses, and alternatives
Confirm every board figure ties to a report schedule and a produced document
Questions to ask the economist
How will you explain the hypothetical negotiation to a jury that has never seen a license?
How will you show why your royalty base is apportioned to the patented feature?
What does the result look like under the opposing expert's licenses?
How will you explain the damages period and the dates that limit it?
Timeline
One to two preparation sessions in the week before testimony, after the demonstratives are drafted and the opposing report has been analyzed.
Required documents
The final report with the measures, the damages period, and the sensitivity schedules
The licenses, the sales data, and the cost records relied on
Draft demonstratives
The opposing expert's report and deposition transcript
Common pitfalls
Presenting the rate and the base as a single number, so the fact finder cannot adjust either one
Leaving the fact finder without the result under the other side's choices
Explaining the royalty in the vocabulary of the case law rather than in terms of what the parties would have agreed and why
How does the economist explain a reasonable royalty to a jury?
As the license the two companies would have signed just before the infringement began, if both had been willing to deal and both knew the patent was valid and infringed. The economist shows the licenses that tell what similar rights sold for, the profit the invention made possible, and the cost of the alternative the infringer had, and walks from that evidence to the base and the rate one step at a time.
What if the fact finder accepts only some of the claims or products?
The report's schedules let the fact finder apply the measure to the claims, products, and periods it accepts and read the result directly. The economist should say on direct that the analysis is built claim by claim and product by product, because it tells the fact finder the damages are not all or nothing.
Does the economist testify about enhanced or exemplary damages?
No. Enhanced patent damages are for the court, and exemplary trade secret damages are for the court under the federal statute and the uniform act, though some state enactments, such as Texas's, give them to the fact finder; either way they turn on the defendant's conduct, not on the economic measure. The economist's testimony covers the compensatory damages and, where the court asks for it, the computation of prejudgment interest.
References
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
Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009). static.case.law
Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016). law.cornell.edu