Apportioning Value In Patent Portfolio License And Sale Agreements

les Nouvelles, 2020

Economic experts in patent infringement cases are often tasked with determining the royalty that an alleged infringer must pay to the patent owner for use of the patent-in-suit. To do this, they frequently rely on patent license and patent sale agreements. When these agreements involve only the patent-in-suit or a technically comparable patent, the royalty determination is straightforward. However, many such agreements involve the sale or license of an entire portfolio of patents. To use those agreements as part of a royalty determination, an expert must be able to apportion the royalty or price from the agreement to account for the other patents in the portfolio. Because the patents in a portfolio rarely have the same value, this exercise can be difficult.

In the article “Apportioning Value In Patent Portfolio License And Sale Agreements,” published in the Licensing Executives Society International journal les Nouvelles, Analysis Group Principal Robert L. Vigil and Associate Xiao Zhang discuss the use of information about patent value distributions obtained from data on patent renewals, surveys, stock price movements, and patent citations as one potential apportionment methodology. Drs. Vigil and Zhang opine that, depending upon the circumstances of a particular case, experts may use the value distributions derived from these sources to estimate the distribution of values of patents contained in license or sale agreements, which can then be used to determine the proportion of the total royalty or price paid in the agreements that may be attributable to the patent-in-suit or the technically comparable patent.

The article was selected as LESI’s Article of the Month for January 2022.

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Vigil R, Zhang X