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Edison in the Boardroom Revisited: How Leading Companies Realize Value from Their Intellectual Property, Second Edition by Patrick H. Sullivan, Suzanne S. Harrison

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Appendix C

A Closer Look at IP Damages

Eric Shih and Rob Kramer

Proposed patent reform legislation in Congress has attempted in recent years to foist a gate-keeping function upon the federal courts; in other words, federal judges would be legislatively empowered to ensure that patent damage methodologies and supporting evidence were clearly set forth during the litigation at hand. Irrespective of what ultimately happens by way of any reform legislation in this regard, these same courts have, in many respects, already assumed the gate-keeping mantle by way of recent court decisions.

Some will argue that the courts, and more specifically the Federal Circuit, have aggressively (and successfully) achieved a retrenchment of patent damages over the past couple of years. To wit, the Federal Circuit vacated a $357 million award against Microsoft. Chief Judge Rader of the Federal Circuit (sitting by designation in federal district court in New York) slashed a jury damage award against Hewlett-Packard by more than 70 percent (i.e., $184 million to $53 million). And, early in 2011, in the Uniloc decision, the Federal Circuit gutted the plaintiff-friendly 25 percent rule of thumb, which served as the long-standing starting point for calculating a reasonable royalty by plaintiffs’ damages experts.

Others, however, may argue that corporates, the courts, and even Congress may well be tilting at damages windmills. Massive damage awards understandably foment some fear and anxiety in corporate ...

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