JD Supra

Ongoing Appeals May Shape How Juries and Courts Determine Patent Royalties

Federal courts have recognized that patent holders are usually not entitled to the total revenues associated with a patent-practicing end product. By extension, they are wary of patent holders’ attempts to use total revenues as the royalty base, even if the patent holder applies a discount (or “royalty rate”) to adjust for the value of the patent. Such an approach can confuse juries and lead to outsized royalty awards.

The Federal Circuit’s decision in the case may have far-reaching implications for how royalties are calculated in the technology sector. As noted in an amicus brief filed by a number of technology giants, previously independent components are increasingly incorporated into a single end product. A rule requiring apportionment of the royalty base beyond the SSPPU acknowledges this trend and protects end product manufacturers from large royalty awards.

Source: JD Supra, LLC

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