9 Colum. Sci. & Tech. L. Rev. 1 (2007-2008)

handle is hein.journals/cstlr9 and id is 1 raw text is: The Columbia
SCIENCE AND TECHNOLOGY LAW REVIEW
www.stlr.org
USING APPORTIONMENT TO REIN IN THE GEORGIA-PACIFIC FACTORS
Eric E. Bensen & Danielle M. White'
In a dramatic departure from well-established patent damages law,
which would confine a reasonable royalty to a portion of the profit
contributed by the infringed patent, current Federal Circuit precedent
permits a reasonable royalty on an even relatively insignificant component
to exceed not only the profit attributable to that component, but, in some
cases, the entire profit on the product. That precedent ignores the history
of the reasonable royalty award, which originated as merely a substitute
for an established or market rate royalty for the patent. Just as the real-
life negotiations leading to an established royalty would result in the
licensor and licensee splitting the profit attributable to the licensed patent,
a reasonable royalty should leave the infringer with a portion of the profit
attributable to the patented invention as compensation for its labor, risk,
and investment. The Federal Circuit's precedent also ignores long-
standing apportionment principles, which, if properly applied, would not
permit a patentee to derive a reasonable royalty from the unpatented
features of an infringing product.  Unbound as they are from   their
economic and legal foundations, royalty awards have, not surprisingly,
become arbitrary and often punitive.
This article argues that to rein in reasonable royalty awards, restore
them to their historical role, and ensure that they are consistent with long-
standing principles of patent damages law, (i) apportionment should be the
threshold question in every reasonable royalty analysis, and (ii) only
factors relevant to approximating a fair market price for the patent should
Eric E. Bensen is co-author of Milgrim on Trade Secrets and Milgrim on Licensing and an
attorney with Paul, Hastings, Janofsky & Walker LLP in New York, where he focuses his
practice on intellectual property litigation, licensing and counseling.
Danielle M. White is an attorney with Paul, Hastings, Janofsky & Walker LLP in New York,
where she focuses her practice on intellectual property litigation and counseling.
The views expressed in this article are solely those of the authors.

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