Does Conjoint Analysis Reliably Value Patents?

58 American Business Law Journal 225 (2021)

U Denver Legal Studies Research Paper No. 20-28

45 Pages Posted: 14 Oct 2020 Last revised: 22 Aug 2022

See all articles by Bernard Chao

Bernard Chao

University of Denver Sturm College of Law

Sydney Donovan

affiliation not provided to SSRN

Date Written: October 8, 2020

Abstract

Modern technology products are often covered by thousands of patents. Yet awards for a single component have averaged a surprisingly high 9.98 percent of the infringing product’s price. To curb such disproportionate awards, the law insists that damages reflect the contribution made by the patent. But determining how to apportion damages in this way has proved to be elusive. One emerging technique that appears to offer rigor is conjoint analysis, a type of survey borrowed from the marketing world. This article explores the validity of the conjoint analysis technique by running two conjoint analysis surveys. Unfortunately, we found serious problems. First, the results of our surveys yielded irrationally high numbers. Most survey features suffered from bizarrely high valuations. Second, we demonstrate how experts can manipulate the results by selecting among a number of different ostensibly reasonable statistical choices and picking the one that yields the most desirable outcome. Based on these findings, we provide several recommendations. First, we argue that courts should not allow evidence of conjoint analysis to show the monetary value of specific features. However, we recognize that there is support for using conjoint analysis to provide relative valuations (i.e., feature A is worth significantly more than feature B). To the extent that courts permit this use, we suggest ways to ensure that experts employ the best science available. These recommendations include assuring that experts accurately depict variability in their results and requiring experts to “preregister” the approach they intend to use with the court

Keywords: Conjoint Analysis, Survey, Patent, Damages, Remedies

Suggested Citation

Chao, Bernard H. and Donovan, Sydney, Does Conjoint Analysis Reliably Value Patents? (October 8, 2020). 58 American Business Law Journal 225 (2021), U Denver Legal Studies Research Paper No. 20-28, Available at SSRN: https://ssrn.com/abstract=3707805

Bernard H. Chao (Contact Author)

University of Denver Sturm College of Law ( email )

2255 E. Evans Avenue
Denver, CO 80208
United States

Sydney Donovan

affiliation not provided to SSRN

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
67
Abstract Views
595
rank
465,376
PlumX Metrics