Downgrade To “Neutral”: A Diminishing Role Of The Georgia-Pacific Factors In Reasonable Royalty Analyses

Ryan Sullivan
Intensity Corporation

DeForest McDuff
Intensity Corporation

Justin Skinner
Intensity Corporation

More than 80% of damages awards in patent liti-gation include reasonable royalties. In these litigations, reasonable royalty analyses by economic experts often involve a linear and monotonous march through the fifteen economic factors listed in Georgia-Pacific v. United States Plywood (S.D.N.Y. 1970), commonly referred to as the Georgia-Pacific factors. For readers that are unfamiliar with the Georgia-Pacific factors, the factors include considerations relating to past technology agreements (factors 1, 2), the nature, scope, and duration of the license (factors 3, 7), licensing policy (factor 4), commercial relationship between the licensor and licensee (factor 5), sales of non-patented items (fac-tor 6), sales and profits (factors 8, 11), contribution of the patented technology (factors 9, 10, 12, 13), opinions of qualified experts (factor 14), and the amount that a licensor and licensee would have agreed to in a hypo-thetical negotiation for a license to the patent-in-suit (factor 15). Damages experts in patent litigation often perform an assessment of each of the fifteen factors as having an “upward,” “downward,” or “neutral” effect on the royalty in a hypothetical negotiation.


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