Intellectual property: fourteen lost contracts claimed, six that could be valued
The claim was for the value of contracts a patent-licensing business said it could no longer close. Only some of them had reached a point where a value could be tested against anything.
The founder of a patent-licensing company claimed that his injuries kept him from performing as chief executive, and that the company lost — or was forced to settle at a loss — a series of contracts as a result. Counsel asked what part of that claim could actually be quantified.
Value only what the record can carry
Fourteen contracts were claimed. For eight of them the claimant offered no estimate of value at all, and the report expressly declines to opine on those eight.
Anchor to an independent source where one exists
Of the six that remained, one was valued from public financial information about the counterparty together with a discount rate drawn from an independent valuation of the patent portfolio. A second was valued from the contract document itself.
Carry the anchor across
The independently derived value came to about 84 percent of the claimant’s own estimate for that contract. The remaining four — for which neither a written agreement nor counterparty financials were available — were proxied by applying that same ratio to the claimant’s estimates.
State the assumptions that carry weight
That licensing revenue has minimal per-unit variable cost, so contract value approximates net profit; and that each party to a contract takes an equal share. Both are stated on the face of the report.
Why eight were left out
For eight of the fourteen claimed contracts, negotiations had not reached a point where the claimant himself could put a value on them. There is no method that produces a reliable number from that, and the report says so rather than filling the space.
Leaving them out reduces the claim. It also means every figure in the report traces to a document — a contract, a public filing, a deposition answer, an invoice — and that is worth more at deposition than a larger total.
What we do not do
We do not adopt a claimant’s estimate because it is the only estimate available. Where the claimant’s figure could be tested independently it came in about 16 percent high, and that correction was applied to the untested figures rather than being noted and set aside.
We also do not blend a claim into one number. Lost contract value, lost consulting income and the cost of hiring out work the claimant would otherwise have done himself are computed separately and carry different evidentiary support. Within that last category the report distinguishes again: two components rest on invoices, the largest on the claimant’s own statement projected forward — and it says which is which.
A claim reduced to the part a document could support
Testing the claimant’s own valuation of the one contract that could be independently valued, then applying that ratio to the rest — which turned a set of self-reported estimates into a calibrated one.
Parties, jurisdictions and identifying facts are altered or withheld. Methods, data volumes and outcomes are not.
Recognise your case in this one?
Tell us which part. We will tell you what was actually decisive in it.