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©CONSOR 2008 1
Valuation, Damages and Valuation, Damages and Expert Witnesses:Expert Witnesses:
Intellectual Property and Intangible Asset Intellectual Property and Intangible Asset DisputesDisputes
Continuing Legal EducationContinuing Legal EducationPresented to Arent Fox LLPPresented to Arent Fox LLP
April 8, 2008April 8, 2008
Weston AnsonWeston AnsonChairmanChairmanCONSORCONSORwww.consor.comwww.consor.comwanson@[email protected]
© CONSOR 2008 2
Asset Groups and Asset Groups and Damages TheoriesDamages Theories
Patent Infringement DamagesPatent Infringement Damages Literal Infringement and Non-Literal Literal Infringement and Non-Literal
InfringementInfringement Contributory InfringementContributory Infringement Induced InfringementInduced Infringement
Copyright Damage TheoriesCopyright Damage Theories Statutory Damages: Trademarks and Statutory Damages: Trademarks and
CopyrightsCopyrights
© CONSOR 2008 3
Types of Damage Awards That Types of Damage Awards That Can Be ImposedCan Be Imposed
Reasonable Royalty RatesReasonable Royalty Rates Actual DamagesActual Damages Lost ProfitsLost Profits Economic DamagesEconomic Damages Loss of ValueLoss of Value Unjust EnrichmentUnjust Enrichment Corrective AdvertisingCorrective Advertising Supplemental Damage AwardsSupplemental Damage Awards Discretionary DamagesDiscretionary Damages Statutory AwardsStatutory Awards InjunctionsInjunctions
© CONSOR 2008 4
Expert Selection and StandardsExpert Selection and Standards
The Daubert StandardsThe Daubert Standards The Frye StandardsThe Frye Standards Federal Rule 702Federal Rule 702 KumhoKumho Other Standards for Expert WitnessesOther Standards for Expert Witnesses
© CONSOR 2008 5
Finding Qualified IP ProfessionalsFinding Qualified IP Professionals
OrganizationsOrganizations PublicationsPublications Expert ServicesExpert Services ReferralsReferrals Case CitingsCase Citings Internet – Sites and BlogsInternet – Sites and Blogs
© CONSOR 2008 6
One Expert or Two?One Expert or Two?
ValuationValuation IP DamagesIP Damages Business DamagesBusiness Damages Economic DamagesEconomic Damages
EvaluationEvaluation IP IssuesIP Issues Licensing Issues/RR’sLicensing Issues/RR’s IP Customs and PracticesIP Customs and Practices
© CONSOR 2008 7
Intangible Asset Valuation MethodsIntangible Asset Valuation Methods
Traditional Valuation MethodsTraditional Valuation Methods MarketMarket IncomeIncome CostCost Relief From RoyaltyRelief From Royalty
Alternative Valuation MethodsAlternative Valuation Methods
© CONSOR 2008 8
Establishing Royalty RatesEstablishing Royalty Rates
Rules of ThumbRules of Thumb Analytic ApproachAnalytic Approach Industry AveragesIndustry Averages Comparable TransactionsComparable Transactions Hypothetical NegotiationsHypothetical Negotiations
© CONSOR 2008 9
Valuation and Damages in Valuation and Damages in Trademark CasesTrademark Cases
Confusion vs. DilutionConfusion vs. Dilution Confusion Surveys vs. Other Confusion Surveys vs. Other
TechniquesTechniques Reverse ConfusionReverse Confusion Royalty Rates and Trademark ValuesRoyalty Rates and Trademark Values
© CONSOR 2008 10
Case Study: LVMHCase Study: LVMH
Dooney & BourkeDooney & Bourke Using Regression AnalysisUsing Regression Analysis
© CONSOR 2008 11
LVMH Regression AnalysisLVMH Regression Analysis
Chart IV.13Famous XYZ Trademark Sales
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Rest of World Sales United States Sales
© CONSOR 2008 12
Overview of Damages for Patent Overview of Damages for Patent and Trade Secret Litigationand Trade Secret Litigation
Lost ProfitsLost Profits Reasonable RoyaltyReasonable Royalty Unjust EnrichmentUnjust Enrichment Head Start MethodologyHead Start Methodology
© CONSOR 2008 13
Case Studies in Patent DamagesCase Studies in Patent Damages
Reasonable Royalty – Patent Reasonable Royalty – Patent InfringementInfringement
Lucent Technologies Inc., et al. v. Lucent Technologies Inc., et al. v. Gateway Inc., et al.Gateway Inc., et al.
Unjust Enrichment – Trade SecretsUnjust Enrichment – Trade Secrets
Ajaxo, Inc. v. E*Trade Group, Inc.Ajaxo, Inc. v. E*Trade Group, Inc.
Head Start Damages – Trade SecretsHead Start Damages – Trade Secrets
Sonoco Products Company v. JohnsonSonoco Products Company v. Johnson
© CONSOR 2008 14
Valuation and Damages in Valuation and Damages in Copyright CasesCopyright Cases
Overview: A History of CopyrightsOverview: A History of Copyrights Legal Aspects of Copyright DamagesLegal Aspects of Copyright Damages Damages Calculations and PrinciplesDamages Calculations and Principles
© CONSOR 2008 15
Copyright Infringement/Damages in Copyright Infringement/Damages in Practice: Case StudiesPractice: Case Studies
Mattel v. Robarb’sMattel v. Robarb’s Bruce v. Weekly World NewsBruce v. Weekly World News Davis v. The GapDavis v. The Gap Design Tex Group v. US Vinyl Design Tex Group v. US Vinyl
ManufacturingManufacturing Lowry’s Reports v. Legg MasonLowry’s Reports v. Legg Mason
© CONSOR 2008 16
Damages in Damages in Celebrity/Entertainment CasesCelebrity/Entertainment Cases
Misappropriation of Right of PublicityMisappropriation of Right of Publicity Postmortem Publicity RightsPostmortem Publicity Rights False EndorsementFalse Endorsement Unjust EnrichmentUnjust Enrichment
© CONSOR 2008 17
Rights of Publicity Rights of Publicity Celebrity Case StudiesCelebrity Case Studies
The Expert’s Role in Rights of Publicity CasesThe Expert’s Role in Rights of Publicity Cases Nikki Sixx v. VansNikki Sixx v. Vans
Misuse of a Stock Paparazzi Celebrity PhotoMisuse of a Stock Paparazzi Celebrity Photo Tom CruiseTom Cruise
Deceptive Product EndorsementDeceptive Product Endorsement Yogi Berra v. Turner BroadcastingYogi Berra v. Turner Broadcasting
Licensing and Publicity Rights, and Licensing and Publicity Rights, and Appropriate Royalty RatesAppropriate Royalty Rates Jesse Ventura v. Titan/World Wrestling FederationJesse Ventura v. Titan/World Wrestling Federation
© CONSOR 2008 18
Other IP Issues in LitigationOther IP Issues in Litigation
Licensing/Rights AgreementsLicensing/Rights Agreements Interpreting Agency AgreementsInterpreting Agency Agreements BankruptcyBankruptcy International or Split VenueInternational or Split Venue Trade DressTrade Dress Merchandising and SponsorshipMerchandising and Sponsorship
Case Study: Oakland Raiders v. NFLCase Study: Oakland Raiders v. NFL
© CONSOR 2008 19
Case StudyCase StudyCompanyCompany ConglomerateConglomerate
ContextContext LitigationLitigation
ComponentsComponents Valuation of stock Valuation of stock distributiondistribution
Valuation of dividend incomeValuation of dividend incomeValuation of paymentsValuation of paymentsValuation of retirement Valuation of retirement
benefitsbenefits
CausesCauses Rights of PublicityRights of PublicityTrademark InfringementTrademark Infringement
ApproachApproach Discounted cash flowsDiscounted cash flows
Concept of ValueConcept of Value Income ApproachIncome ApproachEnterprise ValuationEnterprise Valuation
© CONSOR 2008 20
Case StudyCase Study
CategoryCategory Estimated ValueEstimated Value
Stock DistributionStock Distribution $$ 200,000,000200,000,000
Dividend IncomeDividend Income 85,000,000 85,000,000
PaymentsPayments 30,000,000 30,000,000
Retirement BenefitsRetirement Benefits 10,000,00010,000,000
TOTAL VALUETOTAL VALUE $$ 325,000,000325,000,000
© CONSOR 2008 21
Conclusions and Future IssuesConclusions and Future Issues
The Future of IP – Broad TrendsThe Future of IP – Broad Trends
Specific IP Trends: Living on the EdgeSpecific IP Trends: Living on the Edge
Two Key Battles for the New Two Key Battles for the New MillenniumMillennium
Final Thought: The Ending is the Final Thought: The Ending is the BeginningBeginning