Intellectual Property, 5th Edition

CHAPTER 28AROYALTY RATES AND THE GEORGIA‐PACIFIC FACTORS

The Georgia‐Pacific factors are the most commonly used set of indicators in the determination of a reasonable royalty.¹ While not sanctioned or required, federal courts have consistently referred to these factors as a way to properly determine and consider the impact on a reasonable royalty from a subset of the factors or all the factors. As the Federal Circuit points out, while it has not described the factors as “a talisman for royalty rate calculations, district courts regularly turn to this 15‐factor list when fashioning their jury instructions.”² Why is that? Probably because it is very difficult for a jury to determine a reasonable royalty without some guidelines. Of course, expert witnesses provide guidance and if the jury chooses, it can adopt an expert witness's opinion and award a royalty based on that or provide its own award based on the evidence.

The constant battle is figuring out which factors apply in each specific case and what impact each of those factors may have based on the circumstances of the case at hand. A patentee wants to receive the highest possible royalty, while the defendant will want to have the lowest possible royalty. Assuming infringement is an important step of the process and one that is often said to be considered but in looking at the factors it is apparent that some defendants fail to fully consider this underlying premise.

So what guidance is given to a jury for determination of ...