Patent Law: Surveys and More

The Emerging Legal Requirement:

“For the ‘entire market value’ rule to apply as the measure of damages for patent infringement, the patentee must prove that the patent-related feature is the basis for customer demand of the accused product.”  [italics supplied]
Lucent Technologies, Inc., et al. v. Gateway, Inc., et al. 580 F.3d 1301 (Federal Cir. 2009)

Could you prove customer demand if you needed to?

Could you prove lack of customer demand if you needed to?

Traditional Survey Research:

One approach for trying to prove the presence or absence of consumer demand involves traditional survey research. However, asking questions of past purchasers at a point in time long after they purchased the item is likely to generate answers subject to faulty memory and colored by post-purchase experiences (e.g., although a feature of the product may not have played a role in their purchase, their post-purchase experiences made them value the feature, or vice versa). Asking prospective purchasers questions at some point before they reach a purchase decision can generate other problems. Some features customers say will be important when reaching their decision often turn out not to weigh heavily -- or even be considered -- at time of purchase.

A More Powerful Alternative toTraditional Survey Research:

Wouldn’t it be helpful to have evidence identifying the features customers actually consider while making a purchase decision, rather than what they think they considered or will consider?

In two recent cases, one a patent matter with hundreds of millions of dollars at risk¹ and the other a class action with tens of millions at risk², prospective purchasers engaged in simulations that enabled us to identify, with great precision, the information and features they actually considered and the degree to which this affected their purchase decisions. In both instances, while plaintiffs were relying on circumstantial evidence, our research for defendants showed trivial levels of demand for the contested features and proved instrumental in having our clients reach very favorable pre-trial settlements. An exhibit from one of these matters is provided in the following chart.

Though the burden of proof rests with plaintiff for showing damages, as this exhibit illustrates, when the contested feature (identified by the arrow) is found to play an inconsequential role in driving customer demand, the findings can be used to substantially limit a client’s exposure.

Tired of juries hearing unsound damages theories? If so, then the next time you are involved in a patent suit involving damages, please call to learn what we can do for you. If you don’t have an active case at the moment but would like to know more, please give us a call. And if you are a trademark specialist, please share this information with your colleagues in patent law.

¹Polaroid Corp. v. Hewlett-Packard Co., U.S.D.C. District of Delaware, 2008.
²John Taylor et al. v. JVC America Corp,. U.S.D.C. District of New Jersey. 2008.
³Prof. Jacob Jacoby, senior author of the American Bar Association’s forthcoming treatise entitled Trademark Surveys, designed the research; Phi Power Communications implemented the studies.