KW Economics prepares business valuation for intellectual property infringement cases involving Rhode Island: the measure each patent, trademark, copyright, or trade secret claim carries, the sales, cost, and license records that drive it, and a report built for the federal and Rhode Island courts that hear the claims. Plaintiff and defense.
Valuation enters an intellectual property case when the measure of the harm is a value rather than a stream of lost sales: a trade secret that disclosure destroyed, where the governing law allows its value at the date of the disclosure as the measure of the loss; a business whose products or brand the infringement impaired, measured by the change in the value of the business; or a patent, mark, copyright, or body of know-how whose value is itself at issue in a license dispute or a transaction. The economist values the asset or the business under the income, market, and cost approaches as the facts support, states the projections, royalty rates, useful lives, and discount rate the value rests on, and coordinates the valuation with any lost profits or royalty claim, so the same earnings are not counted twice.
Valuation of closely held businesses and ownership interests for shareholder and partnership disputes, divorce, estate and gift matters, and buy-sell disagreements. The work applies the income, market, and asset approaches under the standard of value that governs the matter, addresses discounts for lack of control and marketability where they apply, and documents every input so the conclusion can be tested on cross-examination.
Which measure dominates depends on the right and on how the parties compete. Where the owner and the infringer sell competing products and few substitutes exist, lost profits on the diverted sales and price erosion can exceed any royalty; where the owner licenses rather than sells, or many substitutes share the market, the reasonable royalty usually carries the claim, and the royalty base, the comparability of the licenses, and the cost of the infringer's alternatives move it most. In a trademark or copyright claim for the infringer's profits, the costs the infringer can deduct and the share of profit it can attribute to factors other than the protected right are the usual battleground, and in a trade secret case the length of the protection period and the head start, and whether the owner's loss and the misappropriator's gain overlap, often decide the size of the award. Across every right, apportionment to the protected feature is the most contested input. 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.
In the federal district courts, which hear patent and copyright infringement claims between private parties, damages testimony is tested under the federal rules of evidence: whether the expert is qualified, whether the testimony rests on sufficient facts or data, and whether reliable methods were reliably applied to the facts of the case, with the proponent showing each is more likely than not. Claims heard in Rhode Island's own courts are tested under the standard those courts apply. Rhode Island trial judges act as gatekeepers for expert testimony and ask whether the economist is qualified, whether the method is reliable and accepted in the profession, and whether it fits the facts of the case. An intellectual property damages report meets each of these inquiries by tying every royalty input, apportionment step, and sales figure to the record or to another expert's stated opinion.
Highest court: Rhode Island Supreme Court. Court system: courts.ri.gov.
Federal venues: District of Rhode Island.
Patent, copyright, and trademark damages are set by federal statute: a reasonable royalty at least, and lost profits where they are proven, for a patent, with recovery limited to six years before suit and, for unmarked products, to the period after notice; the defendant's profits, the owner's actual damages, and the costs of the action for a trademark; and actual damages and the infringer's profits for a copyright, or statutory damages the owner elects instead where the work was registered in time, before the infringement began or within three months after first publication. Those measures do not change with the state, though the regional circuit's decisions govern how the copyright and trademark measures are applied. A trade secret claim can be brought under the federal statute, and most states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have also enacted a version of the Uniform Trade Secrets Act; Rhode Island's own law can govern the contract and license claims, whether they are brought with an infringement claim or on their own, and counsel confirms which trade secret law applies and the measures it allows.
We issue the final report and provide deposition and trial testimony and critique of opposing valuation reports.
Valuation enters an intellectual property case when the measure of the harm is a value rather than a stream of lost sales: a trade secret that disclosure destroyed, where the governing law allows its value at the date of the disclosure as the measure of the loss; a business whose products or brand the infringement impaired, measured by the change in the value of the business; or a patent, mark, copyright, or body of know-how whose value is itself at issue in a license dispute or a transaction. The economist values the asset or the business under the income, market, and cost approaches as the facts support, states the projections, royalty rates, useful lives, and discount rate the value rests on, and coordinates the valuation with any lost profits or royalty claim, so the same earnings are not counted twice.
In the federal district courts, which hear patent and copyright infringement claims between private parties, damages testimony is tested under the federal rules of evidence: whether the expert is qualified, whether the testimony rests on sufficient facts or data, and whether reliable methods were reliably applied to the facts of the case, with the proponent showing each is more likely than not. Claims heard in Rhode Island's own courts are tested under the standard those courts apply. Rhode Island trial judges act as gatekeepers for expert testimony and ask whether the economist is qualified, whether the method is reliable and accepted in the profession, and whether it fits the facts of the case. An intellectual property damages report meets each of these inquiries by tying every royalty input, apportionment step, and sales figure to the record or to another expert's stated opinion. Patent and copyright claims arise under federal law that only the federal courts may hear: a case filed in Rhode Island is heard in the United States District Court for the District of Rhode Island, a case involving a business based in Rhode Island may be filed in another district where venue lies, and a claim against the United States goes to the Court of Federal Claims; trademark and trade secret claims can be filed in federal court or in Rhode Island's own courts. An appeal in a case with a claim or compulsory counterclaim under the patent laws goes to the United States Court of Appeals for the Federal Circuit, and an appeal in any other case from the district court to the United States Court of Appeals for the First Circuit. Claims under Rhode Island law, such as trade secret misappropriation, unfair competition, and disputes over royalties owed under a license, are usually heard with the infringement claim in federal court when they are joined with a patent or copyright claim, and can be heard there on their own where the parties' diverse citizenship brings them within federal jurisdiction; otherwise they are heard in the Superior Court (General jurisdiction; larger civil cases, felonies), with final appeals to the Rhode Island Supreme Court.
Patent, copyright, and trademark damages are set by federal statute: a reasonable royalty at least, and lost profits where they are proven, for a patent, with recovery limited to six years before suit and, for unmarked products, to the period after notice; the defendant's profits, the owner's actual damages, and the costs of the action for a trademark; and actual damages and the infringer's profits for a copyright, or statutory damages the owner elects instead where the work was registered in time, before the infringement began or within three months after first publication. Those measures do not change with the state, though the regional circuit's decisions govern how the copyright and trademark measures are applied. A trade secret claim can be brought under the federal statute, and most states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have also enacted a version of the Uniform Trade Secrets Act; Rhode Island's own law can govern the contract and license claims, whether they are brought with an infringement claim or on their own, and counsel confirms which trade secret law applies and the measures it allows. The report presents each measure the claims support with its period, base, and apportionment, states every license, rate, and cost with its source, and shows the result under the alternatives the other side is likely to argue, so counsel can apply the federal statute or the Rhode Island law that governs each claim to a documented figure.
Request a consultation on Business Valuation or call (201) 343-0700. Plaintiff and defense counsel.