Thought Leadership

Recent rulings by the United States Court of Appeals for the Federal Circuit have provided what may initially appear to be inconsistent guidance as to what it considers to be acceptable methodology for purposes of determining a reasonable royalty in patent infringement matters. In the matter of VirnetX, Inc. and Science Applications International Corporation, v. Cisco Systems, Inc. and Apple, Inc., use of a 50/50 split of incremental profit attributable to infringement as a starting point for the hypothetical negotiation was determined to be inappropriate. However, in the matter of Summit 6, LLC v. Samsung Electronics Co., et al. the court determined that a hypothetical negotiation construct in which “neither party has a stronger negotiating position,” a result in which the incremental “profit attributable to the infringement” is split evenly is “structurally sound [methodology] and tied to the facts of the case.” This paper is an abbreviated version of the original work, which provides insight into the methodology used in the VirnetX matter and explains how such methodology differs from the methodology we used in the Summit 6 matter.

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