Using Surveys to Evaluate the Effect of Non-Infringing Alternatives on Patent Infringement Damages

01 October 1998
By Dr. Lawrence Wu

In this brief, presented as part of the Intellectual Property Dinner Seminar Series, NERA Senior Vice President Dr. Lawrence Wu analyzes a hypothetical case in which a client is notified that it may be infringing upon a patent held by a competitor. In order to protect its patent, the competitor either must prove substantial damages from lost profits and price erosion or consider acceptable non-infringing alternatives to the patented product. If no alternatives exist, then every allegedly infringing sale was a sale that potentially could have been made by the patentee. However, if many acceptable alternatives exist, then the damages are likely to be small. The challenge in such a situation is to estimate how many additional sales the patentee would have obtained had the infringer's product not been in the marketplace.

Dr. Wu explains how and why consumer surveys can serve as powerful tools in determining potential damages. His presentation describes the value of survey data, demonstrates what is involved in conducting a consumer survey, and gives an illustrative example of how to analyze a hypothetical patent infringement case involving two athletic shoe manufacturers. According to Dr. Wu, conducting a survey can be a useful way to get a present-day snapshot of the competitive environment, and is also useful in demonstrating the tradeoffs consumers make when they shop.