Of all the types of litigation, intellectual property (IP) lawsuits deal with some of the most complex material. The factual issues are so technical and complicated that many scholars have requested “expert” judges and/or
juries, where only those individuals with substantial IP knowledge would adjudicate cases. Today, those ideas are still merely suggestions, and the average attorney must deal with jurors who may struggle with the complexities of an IP case. The highly specialized nature of the information discussed in an IP dispute makes this an area where expert witnesses are essential, as they are the ones who can provide simpler explanations to puzzled fact-finders.
Expert witnesses have become a part of the intellectual property landscape. Some companies that develop or accumulate portfolios of patents even have been known to make agreements with expert witness providers to act in partnership. Many legal analysts suggest the importance of innovators bringing in both legal and business professionals (experts) at early stages, long before litigation occurs. It has been suggested time and time again that in the IP field, those who innovate should predict litigation and therefore develop anticipatory strategies with the help of experts. Many IP experts, such as engineers, computer programmers, and design experts, never end up in the courtroom, but provide invaluable assistance as consultants, helping companies identify where one party’s rights end and another’s begin in a simplified fashion that could later be used to impress a jury. Experts are even utilized by the United States Patent & Trademark Office (PTO) to assess issues of good faith in dealing, PTO practice and procedure, and the standard of care in IP-related issues.
One of the main places in which expert witnesses are invaluable is in dealing with monetary issues. Of course, experts are essential in determining economic damages in a given IP case, which is no easy task. For example, the law provides for “damages adequate to compensate for the infringements, but in no event less than a reasonable royalty.” See 35 U.S.C. §284 (2006). Assuming infringement is proven, the decision as to what damages award is appropriate is very much one in which the expert witness is key. In an intellectual property case, generally the formula for damages is either the “lost profits” equation or the “reasonable royalty” doctrine. The lost profits remedy is only available to IP owners who would have made sales absent infringement, while the reasonable royalty remedy is sort of a catchall and fallback for all other instances of IP infringement. See Panduit Corp. v. Stahlin Bros. Fibre Works, Inc. 575 F. 2d 1152, 1157 (6th Cir. 1978) (when lost profits cannot be proved, the patent owner is entitled to reasonable royalties.) A reasonable royalty is the amount of royalty payment that a plaintiff and hypothetical infringer would have agreed to, such as in a theoretical negotiation that would have occurred prior to the filing of the IP suit. To determine this amount, experts have to take into account what the expectations of the plaintiff and the defendant would have been if they had acted reasonably and actually entered into such an agreement. Not only is the calculation of reasonable royalties difficult, but it is hard to explain how one has arrived at the final damages figure to a jury. This is an area where experts are critical. They take complex economic data, make the calculations, and break it down so that a jury can understand it and award the proper amount.
But it isn’t just calculating how parties would or should have acted that plays into the equation. Expert witnesses can also play a vital role in the consulting phase, where they help to identify and quantify the value of a client’s IP assets. Clients often do not know what their particular type of intellectual property is worth, and experts, who have experience in valuation, accounting, marketing, and economics, can help lead to a favorable outcome in intellectual property litigation.
It isn’t just in the damages phase of IP cases that expert witnesses are so important, however. Often, the experts are the ones who can properly explain the scope of certain IP rights in such a way that can define the direction of a lawsuit. Some types of intellectual property are not simply defined. With a design patent, for example, the intellectual property at issue is not a tangible object but a process, or the manner in which something is manufactured. Experts can help make these issues clear to a jury, so that juries understand when those processes have been infringed upon. Even with a utility patent, which is a fixed thing, such as a machine, experts are invaluable in determining the scope of a patent. Defining the intellectual property in a very narrow manner may make it appear that infringement did not occur, while an expert who can persuade a jury that the intellectual property at issue is broader may very well make a case for a particular plaintiff. With trademarks, where the issue is whether or not consumers would be misled by a deceptively similar mark, experts can speak to customary business practices and what social science research reveals about consumer experience.
Whether it’s at the beginning of innovation or towards the end of a lengthy trial, experts will continue to play an integral role in intellectual property cases. From their roles in giving depositions regarding product design, to assessing the value of a particular type of intellectual property, an expert may be an attorney’s best friend in helping make litigation favorable to a client.
By: Kat S. Hatziavramidis, Attorney-at-Law