KW Economics prepares intellectual property damages analysis for intellectual property infringement cases involving California: 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 California courts that hear the claims. Plaintiff and defense.
In an infringement or misappropriation case the damages analysis follows the statute behind each claim. For a patent, the economist builds the reasonable royalty from the hypothetical negotiation at the start of the infringement and any lost profits from the market the patentee and the infringer shared; for a trademark, the defendant's profits from its sales of the infringing goods, with its claimed costs tested, the owner's actual damages, and the cost of corrective advertising; for a copyright, actual damages and the infringer's profits not already counted in them; and for a trade secret, actual loss and unjust enrichment net of their overlap, or a royalty in their place. Each measure is apportioned to the protected right, limited to the recoverable period, and presented claim by claim, so the fact finder can apply the measure it finds.
Economic analysis and expert testimony on damages in patent, trademark, copyright, and trade secret cases and in license and royalty disputes, for the patentee or the accused infringer and for either side of every other claim. The work measures each remedy the governing statute allows: a reasonable royalty and the patentee's lost profits, including price erosion, apportioned to the patented feature; the defendant's profits, the owner's actual damages, and corrective advertising in a trademark case; actual damages and the infringer's profits in a copyright case, where the infringer carries the burden of its deductible expenses and of the profit owed to other factors; and actual loss, unjust enrichment, or a reasonable royalty for a misappropriated trade secret.
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 California's own courts are tested under the standard those courts apply. California courts ask whether the reasoning and data behind an expert opinion are sound and whether the opinion rests on matter of a type experts reasonably rely on, reserving a general-acceptance test for novel scientific techniques; the witness is qualified by training and experience. 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: Supreme Court of California. Court system: courts.ca.gov.
Federal venues: Northern District of California, Eastern District of California, Central District of California, Southern District of California.
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; California'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 on the disclosure schedule and provide deposition and trial testimony, critique of the opposing damages analysis, and updated calculations as the court construes any patent claims and the record develops.
In an infringement or misappropriation case the damages analysis follows the statute behind each claim. For a patent, the economist builds the reasonable royalty from the hypothetical negotiation at the start of the infringement and any lost profits from the market the patentee and the infringer shared; for a trademark, the defendant's profits from its sales of the infringing goods, with its claimed costs tested, the owner's actual damages, and the cost of corrective advertising; for a copyright, actual damages and the infringer's profits not already counted in them; and for a trade secret, actual loss and unjust enrichment net of their overlap, or a royalty in their place. Each measure is apportioned to the protected right, limited to the recoverable period, and presented claim by claim, so the fact finder can apply the measure it finds.
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 California's own courts are tested under the standard those courts apply. California courts ask whether the reasoning and data behind an expert opinion are sound and whether the opinion rests on matter of a type experts reasonably rely on, reserving a general-acceptance test for novel scientific techniques; the witness is qualified by training and experience. 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 California is heard in the United States District Courts for the Northern District of California, Eastern District of California, Central District of California, and Southern District of California, a case involving a business based in California 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 California'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 Ninth Circuit. Claims under California 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 (Unified general jurisdiction trial court in each of 58 counties; handles all civil and criminal matters), with final appeals to the Supreme Court of California.
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; California'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 California law that governs each claim to a documented figure.
Request a consultation on IP Damages or call (201) 343-0700. Plaintiff and defense counsel.