In a recent decision in Uniloc USA, Inc. et al v Microsoft Corporation, the Court of Appeals for the Federal Circuit (CAFC) ruled "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."2 The CAFC thus appears to have limited the future use of what has historically been a widely used method for evaluating royalty rates as a basis for damages under the hypothetical negotiation construct in patent litigation.
May 06, 2013
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