January 19, 2017–Marianne Ley Hayek, a managing economist at Nathan Associates, says an array of economic tools exists to calculate damages when patents for product components are infringed. Litigators may need such analysis more often after the U.S. Supreme Court’s December 6, 2016, ruling in Samsung v. Apple. The ruling, which threw out a lower court’s judgment awarding Apple almost $400 million in damages, could signify the use of a stricter standard for determining damages in design patent infringement cases where the patent applies to a component rather than the entire product.
Hayek shared her expertise in calculating damages for such cases in a Law360 article published January 3. After describing the federal district courts’ increasingly strict interpretation of the Entire Market Value Rule (EMVR), a rule concerning patented parts of products in utility patent cases, Hayek argues that the recent Supreme Court decision may signal that the Federal Circuit will take a more stringent view of damage calculations in design patent cases like Samsung v. Apple.
When the infringing product in a utility patent case is made up of many different constituent parts, the EMVR states that the patent holder can claim damages from sales of the entire product–a smart phone, for example–only if the patented component in question is the feature of the product that makes it valuable to consumers. Otherwise, the patent holder can claim damages only from a portion of sales based on the value of the infringing part. Hayek explains how to apply standard economic principles and tools either to show that the EMVR has been satisfied or to calculate damages based only on the value of one or several components.
The Samsung v. Apple case has now returned to the U.S. Court of Appeals for the Federal Circuit and is awaiting a new decision regarding damages.