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Litigation Support
Solution for Burns, Doane,
Swecker & Mathis LLP
| Challenge |
Burns,
Doane, Swecker & Mathis, L.L.P, is a leading intellectual property law
firm headquartered in the Washington, D.C., area. BDSM’s client is an
inventor of patented methods to enable authorization of pay TV services;
provide billing and program selection information for impulse pay-per-view
services; enable subscribers to block reception of unacceptable
programming; and limit spending by credit-risk subscribers. A
direct-to-home (DTH) satellite service was alleged to have infringed these
patent claims. BDSM was looking for expert analysis to calculate
reasonable royalties for the DTH operator’s use of the patented methods.
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| Solution |
In
collaboration with another consulting firm, PDS Consulting assessed the
extent to which the use of the patented methods resulted in increasing the
value of the DTH operator’s business. We compared a status quo
valuation of the DTH operator given its use of the patented methods versus
valuations assuming the firm had used next-best non-infringing
functionally-equivalent substitutes. The differences in these valuations
represented the values to the DTH operator of the patented methods. We
derived the status quo valuation by discounting the DTH
operator’s forecasted debt-free net cash flows to net present value as
of March 1996 when the DTH service was launched. Our valuations were based
upon information likely to be available to knowledgeable industry analysts
as of March 1996. Reasonable royalties were calculated in terms of
percentages of the patent values. Our analysis drew upon our industry
expertise, capabilities that were lacking in the economist expert employed
by counsel for the DTH operator. For the three patents that remained at
issue in the damages portion of the trial, the jury took our analysis into
account in specifying royalties. |
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