Assessing patent value -- Hardware inventions

Rajeev Gupta & JP Long (Finnegan)
embedded.com (August 31, 2015)

Determining the value of a patent or a patent portfolio is no easy task. This is especially true for the semiconductor industry, where a single infringing product may be covered by hundreds—if not thousands—of other patents. Adding to this complexity, new developments in U.S. patent damages law have the potential to alter the value of semiconductor patents significantly. Recent court decisions have increasingly emphasized the importance of the smallest salable patent-practicing unit (“SSPPU”) in assessing damages for infringement. In this article, we briefly discuss how semiconductor device manufacturers might be able to take advantage of this trend to maximize the value of their own patents and to minimize their infringement liability. In a subsequent article, we will look at factors affecting the value of software inventions.

In Ericsson, Inc. v. D-Link Sys., Inc., the United States Court of Appeals for the Federal Circuit recently underscored the following principles of patent valuation:

Where the entire value of a machine as a marketable article is properly and legally attributable to the patented feature, the damages owed to the patentee may be calculated by reference to that value. Where it is not, however, courts must insist on a more realistic starting point for the royalty calculations by juries—often, the [SSPPU] and, at times, even less

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