Saliency, Anchors & Frames: A Multicomponent Damages Experiment
43 Pages Posted: 1 Apr 2019
Date Written: March 25, 2019
Modern technology products contain thousands, sometimes hundreds of thousands, of different features. Nonetheless, when electronic manufacturers are sued for patent infringement, these suits typically accuse only one feature, or in more complex suits, a handful of features. But damages verdicts often do not reflect the relatively small contribution an individual patent makes to an infringing product. One study observed that verdicts in these types of cases average 9.98% of the price of the entire product. While both the courts and commentators have blamed the law of patent damages, no one has considered whether cognitive biases may cause these outsized damages awards. Relying on decision-making concepts from other contexts, the authors hypothesize that two biases, namely, a saliency bias and anchoring, may be at work in a patent trial. Since the infringing feature is the most salient feature in a patent trial (i.e. the focus of the trial), jurors may tend to overvalue that feature. Moreover, a patentee’s irrationally high damages demand, may “anchor” the juries in that number.
We conducted an online 3x3x2 between-subjects experiment to test whether these biases exist and if so, whether particular debiasing techniques may reduce these biases. In eighteen different scenarios, mock jurors were asked to assess damages for different smartphone features. The three manipulations involved: 1) rotating three features so that they were either the feature-in-suit or one of the other features defendant identified as contributing to the smartphone’s overall value; 2) changing the jury verdict form so that mock jurors had to evaluate both the feature-in-suit and other features together; and 3) having the defendant explicitly call out the plaintiff for anchoring the jury in an irrationally high number.
The results suggest that the two cognitive biases were at play when juries assessed damages for two tested features (camera resolution and enhanced security), but not a third (amount of storage). That may be because the value of increased storage was familiar to mock jurors while the values of the other two features were not. Modifying the jury verdict form reduced, but did not eliminate the primary effect of the saliency bias, while the defendant’s tactic of de-biasing the jury did not significantly reduce damages. In addition, qualitative comments suggested that some mock jurors resisted the jury instructions designed to compensate plaintiffs for the missing feature and instead assessed damages to punish the defendant.
Keywords: empirical, remedies, juries, damages, patent, anchoring, saliency, framing effects
JEL Classification: K41, O34
Suggested Citation: Suggested Citation