Making Sense of 'Apportionment' in Patent Damages

02 June 2011
By Dr. Elizabeth M. Bailey et al.

Controversially large damages awards in patent litigation have been at the center of the debate over patent reform. Of particular concern are situations in which the patented technology is but one of many technologies and assets that are incorporated into a product. A proposed solution to this problem is "apportionment," in which 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. This article from The Columbia Science and Technology Law Review argues that, while the problems that have motivated the apportionment movement are real and serious, such apportionment rules would be arbitrary and may under-compensate valuable innovations, particularly when significant synergies exist among technologies. 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 believe that a more sensible solution is to require litigants to take an economically valid approach to damages.