In a July 8 order in the matter of Convolve, Inc. v. Dell, Inc. et al., United States Magistrate Judge Charles Everingham IV of the Eastern District of Texas declined to limit the use of a “25% apportionment factor” for the purposes of determining a reasonable royalty in a patent infringement litigation. Judge Everingham’s ruling is sure to get wide-spread attention from licensing practitioners and damages experts, particularly in light of the fact that earlier this year, the Federal Circuit found in Uniloc USA, Inc. v. Microsoft Corp. that the 25% rule of thumb is “a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation.” Of course, proponents of the 25% rule of thumb had historically posited that a reasonable royalty rate for an infringed patent could be derived by apportioning the profitability of an alleged infringing product by 25%. In Uniloc, the Federal Circuit indicated that the 25% rule of thumb was “an arbitrary, general rule, unrelated to the facts of the case” and that the rule of thumb “does not say anything about a particular hypothetical negotiation or reasonable royalty involving any particular technology, industry, or party.”

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Seminar Date:
July 19, 2011
Convolve, Inc. v. Dell, Inc. et al. Profit Apportionment Post Uniloc
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