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New Math for the Entire Market Value Rule

BY Robert Buergi
December 20, 2010

The entire market value rule lets a patentee recover damages based on the market value of a product that includes a patented invention, even if the patented invention is only a small part of the entire product. Patentees favor this rule because it often lets them begin their damages calculations with a high dollar amount. But a recent order from the Eastern District of Texas shows that patentees may not be able to calculate damages under the entire market value rule using a simple (market value base ' royalty rate) formula. Such damages calculations may be excluded from trial, leaving the patentee seeking to recover a fraction of the original damages figure.

The Entire Market Value Rule

The entire market value rule stems from the 15 Georgia-Pacific factors, which establish a framework for determining the amount of reasonable royalty damages for patent infringement. The entire market value rule has been shaped by the courts over several years in an effort to calculate damages when an infringing component is a part of a larger product, especially when there is no established market for the infringing component in isolation. The Federal Circuit most recently reaffirmed the entire market value rule in Lucent Tech.
Inc. v. Gateway Inc.
, 580 F.3d 1301 (Fed. Cir. 2009), although it remains a special method of calculating patent infringement damages rather than the general rule for doing so.

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