Court shows itself flexible on apportioning for royalty calculation
Exmark Mfg. Co. v. Briggs & Stratton Power Prods. Grp. LLC, 2018 U.S. App. LEXIS 783 (Jan. 12, 2018)
It’s written in stone that experts developing a reasonable royalty for a multicomponent product must be careful to apportion damages to the product’s protected features. However, there is flexibility in how experts perform the apportionment, the Federal Circuit recently confirmed. In the same opinion, the court also made it clear that a royalty based on an expert’s mechanical Georgia-Pacific discussion risks being invalidated on appeal.
The question of how to apportion came up in a patent infringement suit involving high-end lawn mower manufacturers. The plaintiff owned a patent that covered a lawn mower featuring improved flow control baffles—the structures under the mower deck that direct airflow and grass clippings during operation. The plaintiff claimed the defendant’s lawn mowers violated its patent. A jury awarded the plaintiff nearly $24.3 million in damages.
The plaintiff’s damages expert calculated a reasonable royalty based on the Georgia-Pacific framework. For the royalty base, the expert used the sales price of the accused mowers, rather than the sales price of the flow control baffles. In its appeal with the Federal Circuit, the defendant contended the plaintiff expert’s royalty determination was based on the wrong royalty base—the sales price of the entire law mowers, instead of the flow control baffles. The expert failed to meet the apportion requirement.
The Federal Circuit agreed with the defendant that it was necessary in this case to apportion; however, the court disagreed with the proposition that apportionment invariably had to be done through the royalty base.
Find out more about the Federal Circuit’s apportionment and Georgia-Pacific discussion here.