The Georgia-Pacific Corp. v. U.S. Plywood Corp. case in 1970 established a list of 15 factors to be considered when calculating royalty rates, resulting in the Georgia-Pacific factors. Now those untouchable rules have collapsed, after Middle District of Florida Judge Hernandez Covington allowed the plaintiff’s damages expert, CONSOR Chairman Weston Anson to offer royalty rate analysis without reference to any of the Georgia-Pacific factors, in the matter StoneEagle Services, Inc. v. Pay-Plus Solutions, Inc.
In the StoneEagle matter, Judge Hernandez Covington agreed with plaintiff’s counsel that the Federal Circuit does not require experts to use any or all of the Georgia-Pacific factors when using a methodology for computing damages. That evidentiary ruling has changed the way courts will weigh Georgia-Pacific factors when determining whether an expert is subject to a Daubert challenge.
Mr. Anson testified in court that the Georgia-Pacific factors were “outmoded.” Anson also questioned the use of Georgia-Pacific factors in his books: Fundamentals of Intellectual Property Valuation (ABA 2005), The Intangible Assets Handbook (ABA 2007), IP Valuation and Management (ABA 2010), Expert Witnesses, Valuation & Damages (ABA 2013), and most recently Right of Publicity: Analysis, Valuation, and the Law (ABA 2015).
Subsequently, Anson was allowed to provide testimony based on “market approach” valuation theories, helping the plaintiffs receive a favorable outcome — the jury awarded StoneEagle $2.2 million in royalties for three infringing systems.
This is not the first time that the Georgia-Pacific factors have been questioned as to being the supreme guide to determine if an expert’s testimony should be subject to a Daubert challenge. In 2011, the Uniloc court noted that the Georgia-Pacific factors are not to be thrown out altogether, but their use is not required and, as in any matter, the use of any theory is best addressed by cross-examination and testimony of the expert witness. Chief Judge Randall Rader, who was on the panel of judges for the Uniloc decision, discussed the often flawed application of the Georgia-Pacific factors in a July 2012 SRR Journal interview, when he said:
“Whenever I hear “Georgia-Pacific” I bristle a little bit because the Georgia-Pacific factors are really just a laundry list of various things to be considered. The Georgia-Pacific factors were never meant to be a test or a formula for resolving damages issues. They are merely a list of things to consider. And somehow it gets blown out of context. Many of those 15 factors may be overlapping or irrelevant to a particular case. Those factors were not meant to be counted up the way you count up balls and strikes during a baseball game.”
After the StoneEagle ruling, we can safely say that the Georgia-Pacific factors are no longer the ultimate standard in determining damages awards.
Anson has been successful in more than 90% of the cases in which he was the testifying expert. CONSOR Intellectual Asset Management was founded over 25 years ago, and has been a global industry leader in intellectual property valuation, expert witness services, monetization assistance, licensing strategies and more. If you would like to schedule a meeting to discuss the IP valuation services, litigation services, or CLE presentations that CONSOR can provide, contact Weston Anson at wanson@consor.com.