Royalty Auditing and Other Damage Analysis

We are sometimes engaged by licensors to determine that payments have been made in accordance with specified terms.  The situations typically involve patent licenses or business earn-outs.

Some examples of these analyses include:

  • Oil drilling equipment - Reviewed royalties due under patent license. Our client questioned whether the total value of engineering and components related to the equipment was sufficient domestic content to constitute infringement under Section 271(f). At arbitration, the fact finder adopted our analysis.
  • Digital cameras - Examined royalties due after the licensee failed to provide complete audit reports. Summarized all potentially licensed cameras from public sources, compelling the licensee to provide sales information for all licensed goods. At arbitration, the fact finder adopted our analysis.
  • Joint venture - Calculated the amount of royalties underpaid by a foreign government to a major oil company. The issue arose in connection with a joint venture abroad. Delaware jury awarded the entire amount determined by us - more than $400 million.
  • Chemical compound - Analyzed royalty reports provided by a chemical manufacturer for patented compound. Using inventory and manufacturing records our analysis demonstrated that the royalty reports were accurate. The fieldwork on this assignment was limited to a single day and the total cost to the client was minimal.
  • Software - Reviewed earn-out payments that were dependent on future sales of software. Our client's products had been combined with the purchaser's applications and sales were not separately recorded.
  • Software distribution agreement - Calculated the amounts due under the agreement. Copyright holder's business was bankrupt and its assets had been sold. Our analysis computed copyright holder's lost profits pursuant to the distribution agreement as well as the distributor's profits.
  • Legal malpractice - Our evaluation demonstrated that the opposing party had actually earned profits from its infringement, even after the payment of legal fees and damages.  Accordingly, it had not suffered damages from any alleged malpractice or failure to prevail at trial.