Apportionment Treats The Symptom, Not The Disease

Fri Dec 09 15:24:38 EST 2011
By Dr. Elizabeth M. Bailey et al.

This Law360 article examines the apportionment movement, which has found support as a proposed solution not only to excessive damages awards in situations in which the patented technology is one of many technologies and assets that are incorporated into a product, but also to the related problem of royalty stacking. Under apportionment, the portion of the overall value of the product that is "attributable" to the patented technology is identified. Then, reasonable royalty damages are calculated with reference to this apportioned value of the patented technology rather than the overall value of the product. The authors point out that, while the problems that have motivated the apportionment movement are real and serious, apportionment raises a number of practical problems. In addition, apportionment makes sense as a solution only under the assumption that an economically invalid approach to calculating damages is being taken in the first place. The authors argue that a more sensible solution to excessive damages awards is to require litigants to take an economically valid approach to damages so that apportionment is not necessary.