Intellectual Property

Patent litigation involves unique complexities where the damages at issue hinge on the value of an invention, its market impact, and the harm caused by infringement. Retaining an economist to quantify damages is critical to assessing these challenges effectively and through methods accepted by courts. One of the key challenges with damages analysis in patent litigation is that patents are intangible assets that lack a clear market price. As such, a skilled damages expert must leverage different financial modeling approaches, analytical methods, research capabiilties, and legal standards to reach reliable conclusions about the impact and damages associated with alleged patent infringement. In the United States, patent damages typically take the form of either lost profits or “reasonable royalties,” but often involve additional complicating factors. 

Lost Profits: To calculate lost profits in a patent infringement case, economists begin by studying the market in which the patented invention is used. This involves analysis of financial outcomes, competing technologies, and other market dynamics. After assessing the marketplace, an economist would apply legal standards, such as the Panduit factors, to reach conclusions about the availability of lost profits and provide a quantification of damages.

Reasonable Royalties: In many cases, especially those in which lost profits are not appropriate, a patent owner can still obtain damages in the form of reasonable royalties. Economists estimate reasonable royalties through the construction of a “hypothetical negotiation” between the infringer and the patent owner that takes into account a variety of factors (such as those identified by the court in Georgia-Pacific). 

FRAND Royalties: When patents are included in technological standards, they may be deemed standard-essential patents or “SEPs.” Licenses, and royalty damages, for SEPs must conform to fair, reasonable, and non-discriminatory (“FRAND”) terms. This requires damages experts to skillfully navigate a complicated tightrope between the realities of how businesses operate and desire to license their intellectual property and how courts and standard setting organizations require them to do so.

Convoyed Sales: In some cases, sales of the patented invention may drive sales of unpatented products as well. In such a case, a loss of sales due to an infringer’s use of the patent at issue may lead to losses on “convoyed” products as well. We work closely with clients and counsel to determine whether claims of damages for convoyed sales are appropriate and quantifiable.

Experts at Cirque Analytics have provided testimony in numerous patent infringement cases. These cases have involved single patents, multiple patents, SEPs, convoyed sales, and other complicated variations on intellectual property holdings. Additionally, these cases have involved a broad range of technologies, including medical devices, semiconductors, agricultural products, pharmaceuticals and nutraceuticals, industrial manufacturing processes, computer, internet and telecommunications, clothing and apparel, and scores of other consumer and goods. 

Trademark and trade dress litigation involves protecting a brand’s identity and reputation, where the financial harm from infringement—like consumer confusion or dilution—can be subtle yet significant. Cirque provides consulting in trademark infringement cases related to both liability and damages. Retaining an expert is crucial to accurately addressing questions of confusion and liability, as well as quantifying the financial impact of the alleged infringement of a mark. Critically, this analysis must be done using methods that align with legal standards and present a compelling case in court.

Analysis of Confusion: Trademark confusion cases come in several flavors, including point-of-sale confusion, initial interest confusion, post-sale confusion, and reverse confusion.  Point of sale confusion happens at the time of purchase, when purchasing a “StarBrewz” coffee instead of a “StarBrew” coffee. Initial interest confusion happens when a consumer is initially misled by a similar trademark but realizes the mistake before buying, such as clicking on a link to “Apple.TV” instead of “AppleTV.com”.  Post-slae confusion occurs after a purchase, often when someone else sees the product and mistakes it for another brand, for example seeing someone wearing a poor quality “N1KE” shirt and mistaking it for “NIKE”. Reverse confusion happens when a larger or more famous company uses a trademark similar to a smaller company’s, causing consumers to think the smaller company’s products are tied to or infringing on the larger brand. This can overwhelm the smaller company’s identity.

Cirque’s team of experts can distill the important elements from your trademark and confusion matters, and help you craft winning arguments. 

Damages Analysis: Trademarks and trade dress represent goodwill, customer loyalty, and market recognition, but they can be difficult to value–within or outside of litigation–because they are intangible assets without a direct price tag. To conduct a reliable damages analysis, economists may employ different valuation techniques (e.g., relief-from-royalty method, brand contribution analysis) to estimate their worth. Using these methods, economists isolate the mark’s role in driving sales or profits, distinguishing it from other factors like product quality, marketing, and business decision-making.

Damages for trademark and trade dress infringement commonly take the form of either lost profits or disgorgement of an infringer’s profits, but we have also extensive experience in assessing damages in the form of royalties, corrective advertising, and cost-avoidance.

Trade secret theft involves the misappropriation of confidential, valuable information, such as proprietary formulas, customer lists, or manufacturing processes. The financial harm can be profound but tricky to pin down, making an economist’s expertise as a damages expert essential. One of the reasons that damages analysis for trade secret misappropriation can be challenging is that trade secrets are not openly traded, so their worth is not obvious or established in the marketplace. Economic damages experts use multiple methods–such as cost to develop, income generated, head start, or market advantage conferred—to estimate their value and quantify the damages associated with misappropriation. 

Cirque Analytics has consulted and provided expert opinions and analysis for both plaintiffs and defendants in numerous matters involving allegations of theft of trade secret and related forms of unfair competition.

Cirque Analytics has deep experience in quantifying damages related to copyright infringement. Our analysis has included claims pertaining to software, technical manuals, novels and other written fictional works, films, tattoo art, and other forms of protected media. We have estimated damages for copyright infringement under theories of lost profits, lost royalties, cost avoidance, and disgorgement of an infringer’s profits. 

See false advertising under “commercial and business litigation”.

While most damages related to intellectual property come in the form of lost profits, disgorgement, or reasonable royalties, corrective advertisement is another remedy that may be available in certain cases. In the context of false advertising or trademark infringement cases, corrective advertising damages are aimed at compensating a plaintiff for the cost of repairing harm to their reputation, brand, or market position caused by the defendant’s deceptive or infringing actions. Such a theory is rooted in the idea that when a defendant misleads consumers or dilutes a trademark, the plaintiff may need to spend money to “correct” the resulting confusion, mistrust, or damage. Economists and courts have utilized a variety of methods to address damages in this form. 

Cirque Analytics has consulted and provided testimony in many cases where one or more party is pursuing corrective advertising damages. Additionally, economists at Cirque have published a paper related to this topic, which addresses some of the complications and pitfalls we have encountered.

Many intellectual property cases involve elements of confusion, especially those related to trademarks, trade dress, and false advertising. In such cases, survey instruments are often used by experts to assess likelihood of confusion, and directly identify reasons for the confusion. 

Ideal survey instruments include direct elicitation of consumer choices, as well as free text responses allowing the respondent to explain why they made that choice in their own words.  Other types of survey instruments include conjoint surveys, where respondents are shown a series of product selections with various attributes. Once the series of choices is made, conjoint analysis aims to place a value on each attribute type for a given respondent. 

Cirque Analytics’ team has expertise in survey design and has successfully shown how and whether products make improper use of intellectual property or branding. For example, in “THE CHOSEN, INC., Claimant, vs. ANGEL STUDIOS, INC., Respondent” Cirque Expert Dr. Dina Mayzlin “did demonstrate a sufficient likelihood of confusion and false association in an appreciable number [84%] of consumers … and it fairly and in a non-leading fashion tested the very proposition it was designed to test.” It “convincingly established that … use of the Slogan implies endorsement or sponsorship … and creates a false attribution and a likelihood of confusion” directly leading to a victory for our client. 

The Cirque team of experts can help with your intellectual property matters, both on the defense and plaintiff sides.