After Whitserve, what role in determining damages serves Georgia-Pacific?

The Federal Circuit’s recent Whitserve decision didn’t just sound the death knell for the 25% rule of thumb in patent litigation. It also “turned the Georgia-Pacific analysis on its head,” said Dan Jackson (AlixPartners), in a session on IP damages at the AICPA FVS conference in Orlando. In particular, experts may not simply recite each of the factors in a “cursory” or “conclusory” manner, the court ruled, but must fully analyze each factor and its impact on the damages calculation.

Although the court didn’t go so far as to discredit the analysis in every case (as it did the 25% rule), the decision may signal a turn toward fulfilling the prophecy by Chief Judge Randall Rader that the court will eventually “shoot down” theGeorgia-Pacific framework entirely, Jackson said.

Indeed, just this past summer, Judge Rader admitted that he “bristles a bit” whenever he hears the words “Georgia-Pacific.” The factors are “just a laundry list to be considered,” he said, during an online interview with analysts from Stout Risius Ross; they “were never meant to be a test or a formula for resolving damages issues.” And yet:

Somehow it gets blown out of context—I see it time after time after time. […] The expert … is sitting on the stand and he or she will testify: Well, there are 15 Georgia-Pacific factors and six of them favor us and the other nine are neutral. Well, that is an attempt to convert this laundry list into some kind of a methodology. However, many of those 15 factors may be overlapping or irrelevant to a particular case. Yet some will try to make their case seem more reasonable by stacking up so many Georgia-Pacific factors in their favor and the rest are against their opponent or neutral. And that’s not what the Georgia-Pacific case was ever about and it’s a flawed methodology.

In his 30 years of practice, Jackson has “never seen as much change as I have in the past three years,” and the courts—particularly the Federal Circuit—are “changing the rules of the game that we have lived by for a long time.”