The New Role of Surveys in Patent Infringement Cases

By Gabriel Gelb
Federal courts are moving toward assessing damages in patent infringement cases with the (newer) key criterion of consumer demand generated by the patents at issue rather than the traditional Entire Market Value Rule (EMVR).

Damages based on EMVR have been set aside in such cases as Cornell Univ. v. Hewlett-Packard Co. and Lucent Technologies Inc. v. Gateway Inc. Numerous legal authorities have discussed how decisions by Circuit Judge Randall Rader, among others, are modifying the entire market value rule toward considerations of consumer demand.

In Cornell University, for example, the trial judge excluded an  economist’s testimony because “despite the court’s repeated exhortations to supply economic proof linking any proposed entire market value royalty base to the market and consumer demand, [the expert] simply could not identify any reliable evidence to support his position.”

This emerging trend suggests integrating the expertise of economists with that of survey experts in supporting or defending a damage claim in a patent infringement case. There are several guidelines for the use of surveys in damage claims based on patent infringement.

First, accurately define the place of the patent-in-suit in the final product. I’ve rebutted where surveys claiming damages for software patents that have presented concepts to consumers that “over-reach” what the patent actually contributes.

Every survey requires asking unbiased questions of a relevant population, but that’s just the basics. A decision in April in the E.D. of Texas illustrates my first point where in Fractus, S. A., v. Samsung Electronics, two consumer surveys were excluded because they over-reached, that is, measured reaction to the product, an antenna, as a whole instead of  focusing the survey on the specific technology in the patent-at-issue.

Second, any survey on consumer demand will be subject to intense scrutiny by a rebuttal expert. This is important for patent attorneys to appreciate as they may not be as well versed in the “battle of the survey experts” as are trademark attorneys. Working toward a “bullet-proof” survey calls for a researcher who is highly experienced in litigation surveys.

Third, as in all surveys for litigation, the patent infringement survey is most open to criticism if it fails to accurately determine the relevant population. Survey experts need to be careful about defining the relevant population. For example, in a recent patent case I participated in for the defendants, the plaintiff’s expert queried retail consumers but failed to appreciate that the defendant’s principal customers were businesses: the purchasers were chief information or chief technology officers.

The survey experts in patent infringement litigation should be well versed in advanced statistical analysis, especially conjoint analysis, which examines how purchasers or decision-makers “trade off” various product attributes.

This article was originally published with accompanying graphics on Gabriel Gabe's blog.

Gabriel Gelb

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