Using proprietary procedures developed by Jacoby, and in collaboration with Phi Power Communications, JacobyIP offers a unique ‘Patent Feature Valuator’ service that enables one to identify to what extent specific product features drive customer demand. Illustrative cases follow.
Adaptive Lighting (AL), a feature in Hewlett-Packard® (hp®) color printers, includes a particular algorithm termed Local Area Content Enhancement (LACE). Alleging that LACE infringed Polaroid’s U.S. Patent No. 4,829,381, Polaroid® sued hp®. Both plaintiff and defendant proffered surveys. Fish & Richardson, lead counsel for hp®, retained Jacoby to design defendant’s survey.
Interpreting the matter in traditional terms, plaintiff’s survey focused on asking prospective printer purchasers “About how much less do you think a model without the Adaptive Lighting Technology feature would be worth?” Although the AL feature comes into play only at the extremes (perhaps 10% of the time) and actually cost less than 10 cents to incorporate into each printer, plaintiff’s survey respondents guessed that, on average, an hp® printer with an manufacturer’s suggested list price of $299.99 would cost $50 less, while an hp® printer with an MSRP of $99.99 would cost $20 less. Aside from the other survey flaws, asking such a question of laypeople who have no foundation for estimating the cost and value of such a feature essentially amounts to asking them to provide a guess.
In contrast, after reviewing the Complaint, Jacoby helped hp®’s outside counsel define the research problem as determining whether – and, if so, to what extent – the AL feature played a role in generating customer demand for hp® printers. The survey Jacoby-IP designed and conducted for hp® in 2008 focused on determining the extent to which prospective printer consumers actually paid attention to AL feature information. (It is noteworthy that the very next year, writing in Lucent Technologies, Inc., et al. v. Gateway, Inc., et al., the Federal Circuit held that proving whether a contested feature was the basis for customer demand was critical for determining damages.) Using proprietary procedures developed by Jacoby, prospective purchasers of color printers engaged in a purchase simulation in which they had access to all the information they normally would have access to when reviewing a brochure describing an hp® color printer. The 28 attributes and features mentioned in the brochure included such features as the model name and number, manufacturer’s suggested retail price, functions served by the machine, scan specifications, ink colors and degree of permanence, etc., as well as the AL feature.
The findings revealed that only 17% of the respondents actually acquired information regarding the AL feature while engaged in reaching a purchase decision. When asked to evaluate how important each of the information items they accessed was to them in reaching their purchase decision, only 7% of all the respondents rated the AL feature as being either Extremely Important or Very Important (see exhibit). The survey proved instrumental in defendant achieving a very favorable out of court settlement.
 Polaroid Corporation v. Hewlett-Packard Company, U.S.D.C. D. Delaware, C.A. No 06-738 (SLR) (2007). “For the ‘entire market value’ rule to apply as the measure of damages for patent infringement, the patentee must prove that the patent-related feature is the basis for customer demand of the accused product.” [bolding supplied]. Lucent Technologies, Inc., et al. v. Gateway, Inc., et al. 580 F.3d 1301 (Federal Cir. 2009)
 The rationale for using a simulation rather than standard survey questions is explained in Jacob Jacoby, “Patent Infringement: Proving Customer Demand … or a Lack Thereof,” Intellectual Property Today, October 2012, pages 10-11.
As required by law, patent pending markings appear on many products. But do they play a material role in consumer purchase decisions? In Munchkin, Inc. v. The First Years, Inc. et al. (U.S.D.C. C.D. Ca; CV 10-2219-GW (AGRx)), Plaintiff alleged (1) that defendants improperly marked their products as “Patent Pending” when these products did not practice an invention that was the subject matter of a patent application, and (2) that these markings and actual patent numbers influenced the purchase decisions of the end-users who buy the products either directly from Defendants or from retailers. In essence, Plaintiff was arguing that patent pending markings and actual patent numbers are a product feature purchasers rely upon when reaching their purchase decision. Conducted for Defendant, a survey revealed that a negligible proportion (10% to 15%) of ultimate purchasers of these products actually looked at patent pending markings information prior to reaching their purchase decision and, of those who did, none considered this information important to reaching their purchase decision. The matter settled prior to trial.