At the recent “Best Practices in Patent Monetization” conference in San Francisco, a number of industry experts shared their perspectives on the recent trends in the IP space. One topic that came up more than once was the topic of lawsuits, and whether collecting damages in a suit was a desirable method of monetizing patents. 

To take a deep dive into the data, forensic accountant Elizabeth A. Dean, VP of TM Financial Services, LLC, examined recent relevant cases. First, she pointed out that the recent trend of staggering awards handed out in the last few years – with four different awards topping the billion dollar mark in the last seven years – seems to have abated a bit. The biggest award last year was the $290 million Apple/Samsung decision, which is a far lower total than the $1.7 billion Centocor Ortho v. Abbott award of 2009.

She cited the prevalence of “reasonable royalty” decisions. This concept dates back to the Georgia-Pacific Corp. v. United States Plywood Corp ruling of 1970, which has been used extensively by courts for more than 40 years. Recent cases have highlighted reasonable royalties and have focused on the concept of the “smallest saleable unit,” or the smallest piece of technology that contains the patented tech.

In Internet Machines v. Alienware Corp (2013), the judge decided that the feature in question drove the sales of the product, and adjusted accordingly. On the other hand, in AVM Technologies v. Intel Corp. (2013), the presiding judge decided that the smallest saleable unit required further apportionment and required evidence that the feature in question drove consumer demand. Other cases that addressed the smallest saleable unit were Dynetix Design Solutions v. Synopsys, Tomita Technologies et al v. Nintendo et al, and Rembrandt Social Media v. Facebook. Each of these cases related in some way to the smallest saleable unit and reasonable royalties. 

Dean also looked at FRAND (free, reasonable and non-discriminatory) cases, which deal with standards-setting bodies and standards-essential patents that are required to use those technologies. She cited two cases that dealt with Wi-Fi standards, Microsoft v. Motorola Mobility LLC and Innovatio IP Ventures v. Cisco Systems et al, which considered how essential the technology in question was to the standard, apportioning royalties per unit. 

Both FRAND and reasonable royalties are important topics for any IP litigator to consider, and keeping up with current cases is essential.


For more on this topic, check out the following:

Supreme Court trend toward IP optimization continues with Medtronic decision

IP: The perfect storm that led to the rise of design patents

Technology: Cutting edge changes in the ‘patent exhaustion’ doctrine