Implementing Apportionment

2019 Patently-O Patent Law Journal 20

5 Pages Posted: 22 Oct 2019

See all articles by Bernard Chao

Bernard Chao

University of Denver Sturm College of Law

Date Written: September 18, 2019

Abstract

On August 15, 2019, Time Warner filed a petition with the United States Supreme Court seeking to vacate a $139.8 million damages verdict. That amount represents approximately 5% of Time Warner’s monthly subscriber revenue ($1.37 per subscriber per month). Time Warner argues that this award is too much given the contribution the patented feature made to its infringing service. At its core, the damages portion of the petition is asking the Supreme Court to provide guidance that will ensure that damages verdicts rely on apportionment principles and provide clarity in how they achieve this.

For years, the Federal Circuit has required apportionment in calculating royalties for complex products because modern technology products (e.g. smart phones and semiconductors) have countless features, most of them unrelated to any given patent at issue. The patentee is entitled to capture value added by the infringing feature, but cannot recover value attributable to everything else.

As with many issues in patent law, this is easier said than done. How do courts ensure that a patentee’s expert opinion on the ultimate damages figure is based on apportionment principles? How do we know if the jury verdict reflects those same principles? This essay uses Time Warner's petition to describe the challenge of implementing apportionment and set forths some potential ideas for future study.

Keywords: patent, damages, reasonable royalty, apportionment

JEL Classification: O30

Suggested Citation

Chao, Bernard H., Implementing Apportionment (September 18, 2019). 2019 Patently-O Patent Law Journal 20. Available at SSRN: https://ssrn.com/abstract=3468539 or http://dx.doi.org/10.2139/ssrn.3468539

Bernard H. Chao (Contact Author)

University of Denver Sturm College of Law ( email )

2255 E. Evans Avenue
Denver, CO 80208
United States

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