Page 109 - Intellectual Property Disputes

accounting principles to production of the infringing goods are allowed as deductions. fn 15 The expert
should seek the guidance of client counsel on the rules that apply in the relevant jurisdiction.

Apportionment

The Copyright Act, the Lanham Act, and the DTSA/UTSA each provide that in an unjust enrichment
claim, the intellectual property owner shall recover only the net profits of the infringer attributable to the
infringement. By comparison, in a lost profits claim, all the profits derived from infringing sales may be
awarded as damages. As a result, in an unjust enrichment claim, proving but-for causation that may be
adequate in a lost profit claim for an award of the entire profit of a product containing both infringing
and non-infringing features may not be adequate. Even if consumers would not have purchased the
infringing products but for the infringed intellectual property, apportionment of profit to the infringed
intellectual property versus non-infringing features is allowed in unjust enrichment claims, but it is
typically the defendant’s burden to prove.

Similar to the issue of proving deductible costs, in an unjust enrichment claim, it is the defendant’s
responsibility to prove the deduction from sales to adjust for the apportionment of profits to the various
assets that contribute to the sale of an infringing item. The plaintiff may rebut the testimony of the
defendant on this issue.

The following are some examples of general factors that may be relevant to apportionment:

• Costs of capital

• Intellectual property elements

• Business reputation

• Quality and functionality of product

• Manufacturing ability

• Marketing and advertising

Many other factors can and should be considered in determining the appropriate apportionment given
the facts and circumstances of a specific matter.

Because apportionment is available in a disgorgement claim but not in a lost profits claim, a plaintiff
typically will attempt to prove lost profits when capable of doing so. Apportionment is also not required
in statutory damages. fn 16

In general, courts recognize the inherent difficulty in analyzing apportionment. As a result, courts tend
to require greater certainty in proof of the existence of damages, and they exhibit somewhat greater
flexibility in the proving of apportionment.

fn 15 Terence P. Ross, ed., Intellectual Property Law Damages and Remedies: Updated through Release 4 (New York: Law Journal
Press, 2003), 4-28, 4-29.

fn 16 Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 1010 (9th Cir. 1994), cert. denied, 515 U.S. 1107 (1995).

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