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  • Eastern District of Texas Weighs in on Entire Market Value Rule: Mirror Worlds v. Apple

    July 15, 2011 Daubert, Entire Market Value Rule
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    In a memorandum opinion and order, Judge Davis finds that a jury’s damages award of $208 million was not supported by the evidence. Finding that the accused software features were not shown to have created the “basis for customer demand” or “substantially created the value of the component parts” for Apples hardware and software products, the court finds that Mirror Worlds was obligated to apportion the royalty base, which its expert, Walter Bratic, did not do. And further, it could not try to achieve such apportionment by adjusting the royalty rate downward (citing Uniloc); instead, it must apportion the base. The court also faults Mr. Bratic for failing to support the suggested reasonable royalty rates, for not explaining why Apple would agree to a running royalty, and for failing to account for certain license agreements that did not award similar royalties.

    Although Mirror Worlds argued that their damages calculation started with the smallest salable units, here we see another court set that issue aside and instead focus on whether the patented feature created the basis for customer demand. As a result, questions remain regarding the importance of the “smallest salable unit” (as noted by the Federal Circuit in Cornell v. hp) as a determinant of the royalty base.

    Case: Mirror Worlds, LLC v. Apple, Inc., 6-08-cv-00088 (E.D. TX, Tyler Division, April 4, 2011, Order) (Davis)

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    IP Value Blog focuses on news and current court cases regarding intellectual property valuation. IP Value Blog is published by Eric Phillips of VLF Consulting.

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    25% Rule, Apportionment Techniques, Data Considered, Date of Hypothetical Negotiation, Daubert, Entire Market Value Rule, Forward Citation Analysis, Hypothetical Negotiation, Jury Verdict Form, License Agreement Comparability, Lost Profits, Lump Sum, Method Claims, Nash Equilibrium, Non-Infringing Alternatives, Patent Reform Act, Post-Judgment Royalty, Prejudgment Interest, Royalty Base, Royalty Rate, Surveys, Use of Settlement Agreements
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