©CONSOR 2008 1

Valuation, Damages and Valuation, Damages and Expert Witnesses:Expert Witnesses:

Intellectual Property and Intangible Asset Intellectual Property and Intangible Asset DisputesDisputes

Continuing Legal EducationContinuing Legal EducationPresented to Arent Fox LLPPresented to Arent Fox LLP

April 8, 2008April 8, 2008

Weston AnsonWeston AnsonChairmanChairmanCONSORCONSORwww.consor.comwww.consor.comwanson@consor.cowanson@consor.comm

© CONSOR 2008 2

Asset Groups and Asset Groups and Damages TheoriesDamages Theories

Patent Infringement DamagesPatent Infringement Damages Literal Infringement and Non-Literal Literal Infringement and Non-Literal

InfringementInfringement Contributory InfringementContributory Infringement Induced InfringementInduced Infringement

Copyright Damage TheoriesCopyright Damage Theories Statutory Damages: Trademarks and Statutory Damages: Trademarks and

CopyrightsCopyrights

© CONSOR 2008 3

Types of Damage Awards That Types of Damage Awards That Can Be ImposedCan Be Imposed

Reasonable Royalty RatesReasonable Royalty Rates Actual DamagesActual Damages Lost ProfitsLost Profits Economic DamagesEconomic Damages Loss of ValueLoss of Value Unjust EnrichmentUnjust Enrichment Corrective AdvertisingCorrective Advertising Supplemental Damage AwardsSupplemental Damage Awards Discretionary DamagesDiscretionary Damages Statutory AwardsStatutory Awards InjunctionsInjunctions

© CONSOR 2008 4

Expert Selection and StandardsExpert Selection and Standards

The Daubert StandardsThe Daubert Standards The Frye StandardsThe Frye Standards Federal Rule 702Federal Rule 702 KumhoKumho Other Standards for Expert WitnessesOther Standards for Expert Witnesses

© CONSOR 2008 5

Finding Qualified IP ProfessionalsFinding Qualified IP Professionals

OrganizationsOrganizations PublicationsPublications Expert ServicesExpert Services ReferralsReferrals Case CitingsCase Citings Internet – Sites and BlogsInternet – Sites and Blogs

© CONSOR 2008 6

One Expert or Two?One Expert or Two?

ValuationValuation IP DamagesIP Damages Business DamagesBusiness Damages Economic DamagesEconomic Damages

EvaluationEvaluation IP IssuesIP Issues Licensing Issues/RR’sLicensing Issues/RR’s IP Customs and PracticesIP Customs and Practices

© CONSOR 2008 7

Intangible Asset Valuation MethodsIntangible Asset Valuation Methods

Traditional Valuation MethodsTraditional Valuation Methods MarketMarket IncomeIncome CostCost Relief From RoyaltyRelief From Royalty

Alternative Valuation MethodsAlternative Valuation Methods

© CONSOR 2008 8

Establishing Royalty RatesEstablishing Royalty Rates

Rules of ThumbRules of Thumb Analytic ApproachAnalytic Approach Industry AveragesIndustry Averages Comparable TransactionsComparable Transactions Hypothetical NegotiationsHypothetical Negotiations

© CONSOR 2008 9

Valuation and Damages in Valuation and Damages in Trademark CasesTrademark Cases

Confusion vs. DilutionConfusion vs. Dilution Confusion Surveys vs. Other Confusion Surveys vs. Other

TechniquesTechniques Reverse ConfusionReverse Confusion Royalty Rates and Trademark ValuesRoyalty Rates and Trademark Values

© CONSOR 2008 10

Case Study: LVMHCase Study: LVMH

Dooney & BourkeDooney & Bourke Using Regression AnalysisUsing Regression Analysis

© CONSOR 2008 11

LVMH Regression AnalysisLVMH Regression Analysis

Chart IV.13Famous XYZ Trademark Sales

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Rest of World Sales United States Sales

© CONSOR 2008 12

Overview of Damages for Patent Overview of Damages for Patent and Trade Secret Litigationand Trade Secret Litigation

Lost ProfitsLost Profits Reasonable RoyaltyReasonable Royalty Unjust EnrichmentUnjust Enrichment Head Start MethodologyHead Start Methodology

© CONSOR 2008 13

Case Studies in Patent DamagesCase Studies in Patent Damages

Reasonable Royalty – Patent Reasonable Royalty – Patent InfringementInfringement

Lucent Technologies Inc., et al. v. Lucent Technologies Inc., et al. v. Gateway Inc., et al.Gateway Inc., et al.

Unjust Enrichment – Trade SecretsUnjust Enrichment – Trade Secrets

Ajaxo, Inc. v. E*Trade Group, Inc.Ajaxo, Inc. v. E*Trade Group, Inc.

Head Start Damages – Trade SecretsHead Start Damages – Trade Secrets

Sonoco Products Company v. JohnsonSonoco Products Company v. Johnson

© CONSOR 2008 14

Valuation and Damages in Valuation and Damages in Copyright CasesCopyright Cases

Overview: A History of CopyrightsOverview: A History of Copyrights Legal Aspects of Copyright DamagesLegal Aspects of Copyright Damages Damages Calculations and PrinciplesDamages Calculations and Principles

© CONSOR 2008 15

Copyright Infringement/Damages in Copyright Infringement/Damages in Practice: Case StudiesPractice: Case Studies

Mattel v. Robarb’sMattel v. Robarb’s Bruce v. Weekly World NewsBruce v. Weekly World News Davis v. The GapDavis v. The Gap Design Tex Group v. US Vinyl Design Tex Group v. US Vinyl

ManufacturingManufacturing Lowry’s Reports v. Legg MasonLowry’s Reports v. Legg Mason

© CONSOR 2008 16

Damages in Damages in Celebrity/Entertainment CasesCelebrity/Entertainment Cases

Misappropriation of Right of PublicityMisappropriation of Right of Publicity Postmortem Publicity RightsPostmortem Publicity Rights False EndorsementFalse Endorsement Unjust EnrichmentUnjust Enrichment

© CONSOR 2008 17

Rights of Publicity Rights of Publicity Celebrity Case StudiesCelebrity Case Studies

The Expert’s Role in Rights of Publicity CasesThe Expert’s Role in Rights of Publicity Cases Nikki Sixx v. VansNikki Sixx v. Vans

Misuse of a Stock Paparazzi Celebrity PhotoMisuse of a Stock Paparazzi Celebrity Photo Tom CruiseTom Cruise

Deceptive Product EndorsementDeceptive Product Endorsement Yogi Berra v. Turner BroadcastingYogi Berra v. Turner Broadcasting

Licensing and Publicity Rights, and Licensing and Publicity Rights, and Appropriate Royalty RatesAppropriate Royalty Rates Jesse Ventura v. Titan/World Wrestling FederationJesse Ventura v. Titan/World Wrestling Federation

© CONSOR 2008 18

Other IP Issues in LitigationOther IP Issues in Litigation

Licensing/Rights AgreementsLicensing/Rights Agreements Interpreting Agency AgreementsInterpreting Agency Agreements BankruptcyBankruptcy International or Split VenueInternational or Split Venue Trade DressTrade Dress Merchandising and SponsorshipMerchandising and Sponsorship

Case Study: Oakland Raiders v. NFLCase Study: Oakland Raiders v. NFL

© CONSOR 2008 19

Case StudyCase StudyCompanyCompany ConglomerateConglomerate

ContextContext LitigationLitigation

ComponentsComponents Valuation of stock Valuation of stock distributiondistribution

Valuation of dividend incomeValuation of dividend incomeValuation of paymentsValuation of paymentsValuation of retirement Valuation of retirement

benefitsbenefits

CausesCauses Rights of PublicityRights of PublicityTrademark InfringementTrademark Infringement

ApproachApproach Discounted cash flowsDiscounted cash flows

Concept of ValueConcept of Value Income ApproachIncome ApproachEnterprise ValuationEnterprise Valuation

© CONSOR 2008 20

Case StudyCase Study

CategoryCategory Estimated ValueEstimated Value

Stock DistributionStock Distribution $$ 200,000,000200,000,000

Dividend IncomeDividend Income 85,000,000 85,000,000

PaymentsPayments 30,000,000 30,000,000

Retirement BenefitsRetirement Benefits 10,000,00010,000,000

TOTAL VALUETOTAL VALUE $$ 325,000,000325,000,000

© CONSOR 2008 21

Conclusions and Future IssuesConclusions and Future Issues

The Future of IP – Broad TrendsThe Future of IP – Broad Trends

Specific IP Trends: Living on the EdgeSpecific IP Trends: Living on the Edge

Two Key Battles for the New Two Key Battles for the New MillenniumMillennium

Final Thought: The Ending is the Final Thought: The Ending is the BeginningBeginning