Patent Damages

Uniloc kills 25% rule, clarifies EMVR

The Federal Circuit issued a bright-line rule regarding the “25% rule”, holding it to be inadmissible as a matter of Federal Circuit law.  Specifically, “This court now holds as a matter of Federal Circuit law that the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation. Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.”

Additionally, the Court addressed language from Lucent regarding the propriety of using the entire product as a royalty base.  The plaintiff argued that, as it understood Lucent, using the entire base is always acceptable, so long as the royalty rate is sufficiently low.  The Court disagreed, stating: “The Supreme Court and this court’s precedents do not allow consideration of the entire market value of accused products for minor patent improvements simply by asserting a low enough royalty rate.”

<<Uniloc CAFC.pdf>>

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