MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 1
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`Economic Damages
`in Intellectual Property
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`
`
`EDITED BY DANIEL SLOTTJE
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`@ W
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`ILEY
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`John Wiley & Sons, Inc.
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 1
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 2
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`This book is printed on acid-free paper.
`
`Copyright © 2006 by john Wiley 81 Sons, Inc. All rights reserved.
`
`Published by John Wiley «Sc Sons, Inc., Hoboken, New Jersey.
`Published simultaneously in Canada.
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`No part of this publication may be reproduced, stored in a retrieval system, or
`transmitted in any form or by any means, electronic, mechanical, photocopying, recording,
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`permission should be addressed to the Permissions Department,]ohnWi1ey 85 Sons, Inc.,
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`Library of Congress Cataloging-in-Publication Data:
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`ISBN-10: 0-471-79341-8 (cloth)
`ISBN-13: 978-0-471-79341-0 (cloth)
`
`Printed in the United States of America
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`10 9 8 7 6 5 4 3 2 1
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 2
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 3
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` nm__mm
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`Marc E. Ackerman
`
`Marc E. Ackerman is a trial and appellate litigator Who concentrates on intellectual prop-
`erty and commercial disputes. He is a partner at White & Case LLP in New York. Mr.
`Ackerman has handled a broad array of intellectual property disputes, including matters
`involving trademark, copyright, unfair competition, trade dress, trade secrets, rights of
`privacy/publicity, libel, and First Amendment. He regularly advises and litigates on behalf
`of clients in the media, sports and financial services industries, among others. Mr. Acl<er—
`man received his B.A. fromYale University, cum laude (1989) and his ].D., from NevvYork
`University School of Law, cum laude (1992).
`
`Ashok Ayyar
`
`Ashok Ayyar graduated from Rice University with a B.A. in mathematical economic
`analysis. He currently works at the U.S. International Trade Commission, Office of Eco-
`nomics, where he analyzes cases of dumping and intellectual property infringement by
`imported goods.
`
`Robert Basmann
`
`Robert Basmann is a professor of economics at Binghamton University and Emeritus pro-
`fessor of economics at Texas A&M University. Professor Basmann was one of the pioneers
`in the development of modern econometrics with his path—breaking Work on the esti-
`mation of simultaneous equation systems and finite sample distribution theory. Professor
`Basmann also was one of the first economists to introduce experimental economics into
`mainstream economic thought and did much of the original work on variable consumer
`preferences. His papers have appeared in Econometrica (numerous times), the Journal of
`Econometrics, thejournal 0}‘the American Statistical Association, and many others. He has directed
`dozens of dissertations and is a Fellow of the Econometric Society as well.
`
`Jack B. Blumenfeld
`
`Jack B. Blumenfeld is a partner at Morris Nichols. For the last 25 years, he has specialized
`in intellectual property litigation and other matters relating to patents, trade secrets, trade-
`marks, and copyrights.
`
`XV
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 3
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE?
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`XVI ABOUT THE AUTHORS
`
`Michael Buchanan
`
`l\/like Buchanan is a Managing Director in FTI Consulting, lnc.’s Forensic practice in Dallas,
`Texas, where he provides economic and statistical analysis to clients involved inlitigation,
`arbitration, mediation and other contexts Where parties areengaged in complex business
`disputes. He specializes in providing advisory and expert Witness services to clients involved
`in litigation matters and other matters involving economic analysis.
`
`Felix Chan, Ph.D.
`
`Felix Chan is Senior Lecturer in Economics and Finance at the Curtin University of
`Technology. He Was previously an Australian Research Council Postdoctoral Fellow after
`receiving his Ph.D. degree with Distinction from the University of Western Australia
`in 2005. Dr. Chan has co—authored a number of articles in leading international journals
`
`in financial econometrics, risk management, tourism research, and intellectual property,
`including journal of Econornetricsjournal of/lpplied Econometrics, Scientornetrics, and Environ-
`mental Modelling and Software. He has co—authored a number of published articles model-
`ling the trends and Volatility in patents registered in the United States.
`
`Michaelyn Corbett, Ph.D.
`Michaelyn Corbett is a managing economist at LECG. She has extensive experience
`in economic analysis related to antitrust matters in litigation, especially in the healthcare
`industry, and intellectual property issues. Dr. Corbett received her Ph.D. in economics
`from the University of Illinois.
`
`Scott W. Cragun
`ScottW Cragun is a manager in FTI Consulting, Inc.’s Forensic and Litigation Consult-
`ing practice in Salt Lake City, Utah. Mr. Cragun has over seven years of experience in
`financial and litigation consulting. His areas of expertise are damages analysis including lost
`profit, reasonable royalty, and other quantitative analysis involving intellectual property.
`He has also advised on unfair competition breach of contract and business interrup-
`
`tion issues and conducted royalty audits. Mr. Cragun holds a B.S. in communication from
`
`the University of Utah and an M.B.A. from BrighamYoung University.
`
`Jesse David, Ph.D.
`Jesse David is a vice president in NERA’s Antitrust and Intellectual Property practices. At
`NERA, Dr. David provides consulting and expert testimony for clients with emphasis in
`
`the areas of competition analysis and damages estimation in patent infringement cases,
`
`antitrust matters, and other business disputes. Dr. David also conducts valuation analyses
`for intangible assets in the context of due diligence, insurance purchases, and litigation risk
`assessments. He has researched recent trends in patent litigation and the effects of liti-
`
`gation on patent value, Dr. David has Written and spoken frequently on issues related
`to intellectual property, the calculations of economic damages, and other topics. Dr. David
`
`received his B.A. from Brandeis University and his Ph.D. from the Economics Department
`
`
`
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`
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`
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 4
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`XVI
`
`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 5
`ABOUT THE AUTHORS
`
`
`
`Michael Buchanan
`
`Mike Buchanan is a Managing Director in FTI Consulting, Inc.’s Forensic practice in Dallas,
`Texas, Where he provides economic and statistical analysis to clients involved in litigation,
`arbitration, mediation and other contexts where parties are engaged in complex business
`disputes. He specializes in providing advisory and expert witness services to clients involved
`in litigation matters and other matters involving economic analysis.
`
`Felix Chan, Ph.D.
`
`Felix Chan is Senior Lecturer in Economics and Finance at the Curtin University of
`Technology. He was previously an Australian Research Council Postdoctoral Fellow after
`receiving his Ph.D. degree with Distinction from the University of Western Australia
`in 2005. Dr. Chan has co—authored a number of articles in leading international journals
`in financial econometrics, risk management, tourism research, and intellectual property,
`includingjoumal of Ecorzometricsjoumal ofApplied Econometrics, Scientometrics, and Environ-
`mental Modelling and Stftware. He has co—authored a number of published articles model-
`ling the trends and volatility in patents registered in the United States.
`
`Michaelyn Corbett, Ph.D.
`
`Michaelyn Corbett is a managing economist at LECG. She has extensive experience
`in economic analysis related to antitrust matters in litigation, especially in the healthcare
`industry, and intellectual property issues. Dr. Corbett received her Ph.D. in economics
`from the University of Illinois.
`
`Scott W/. Cragun
`
`ScottW Cragun is a manager in FTI Consulting, Inc.’s Forensic and Litigation Consult-
`ing practice in Salt Lake City, Utah. Mr. Cragun has over seven years of experience in
`financial and litigation consulting. His areas of expertise are damages analysis including lost
`profit, reasonable royalty, and other quantitative analysis involving intellectual property.
`He has also advised on unfair competition breach of contract and business interrup-
`tion issues and conducted royalty audits. Mr. Cragun holds a BS. in communication from
`the University of Utah and an M.B.A. from BrighamYoung University.
`
`Jesse David, Ph.D.
`
`Jesse David is a vice president in NERA’s Antitrust and Intellectual Property practices. At
`NERA, Dr. David provides consulting and expert testimony for clients with emphasis in
`the areas of competition analysis and damages estimation in patent infringement cases,
`antitrust matters, and other business disputes. Dr. David also conducts valuation analyses
`for intangible assets in the context of due diligence, insurance purchases, and litigation risk
`assessments. He has researched recent trends in patent litigation and the effects of liti~
`gation on patent value. Dr. David has Written and spoken frequently on issues related
`to intellectual property, the calculations of economic damages, and other topics. Dr. David
`received his B.A. from Brandeis University and his Ph.D. from the Economics Department
`
`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 5
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 6
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`ABOUT THE AUTHORS XVII
`
`ensic practice in Dallas,
`
`; involved in litigation,
`d in complex business
`vices to clients involved
`S.
`
`Curtin University of
`stdoctoral Fellow after
`
`' of Western Australia
`
`international journals
`l intellectual property,
`itometrics, and Environ-
`>lished articles model-
`Ltes.
`
`extensive experience
`ially in the healthcare
`r Ph.D. in economics
`
`.d Litigation Consult-
`
`ears of experience in
`analysis including lost
`intellectual property.
`nd business interrup-
`communication from
`
`:1'Slty.
`
`Property practices. At
`
`ents With emphasis in
`.t infringement cases,
`
`as valuation analyses
`lS€S, and litigation risk
`nd the effects of liti-
`
`ntly on issues related
`
`:her topics. Dr. David
`
`ionomics Department
`
`at Stanford University. Dr. David’s graduate research focused on modeling markets for
`publicly provided services and associated aspects related to taxation and policy.
`
`Stephen E. Dell
`Stephen E. Dell is a manager in FTI Consulting, Inc.’s Forensic and Litigation Consult-
`ing practice in I-Iouston,Texas. He is experienced in both financial and litigation con-
`sulting, primarily assisting clients with complex intellectual property damage analyses. Mr.
`Dell has experience in the entire litigation process, including discovery, complex damages/
`financial analysis, report writing, and licensing. Mr. Dell holds a B.A. degree in Economics
`(emphasis in Finance) from the University of Texas at Austin.
`
`Jeffrey A. Dubin, Ph.D.
`]effreyA. Dubin is currently professor of economics at the California Institute of Tech—
`nology, Where he has been a faculty member since 1982. Dr. Dubin earned his undergraduate
`degree in economics with highest honors and great distinction from the University of
`California, Berkeley, and received a Ph.D. in economics from the Massachusetts Institute
`of Technology. Dr. Dubin’s research focuses on microeconomic modeling With particular
`emphasis in applied econometrics. He is the author of numerous publications, including
`Consumer Durable Choice and the Demandfor Electricity; Studies in Consumer Demand-—
`Econometric Methods Applied to Marlee: Data; Empirical Studies in Applied Economics; and The
`California Energy Crisis: I/Vhnt, Why, and I/Vhatis Next. Dr. Dubin is also co—founding member
`and director of statistical and economic analysis at Pacific Economics Group in Pasadena.
`
`Christopher Gerardi
`Christopher Gerardi is a senior managing director in FTI’s Forensic practice in NeWYork.
`Mr. Gerardi has over 15 years of experience assisting companies and plaintiffs’ and defen—
`dants’ counsel with complex economic, financial, and accounting and litigation issues. He
`specializes in applied economic analysis and damage analyses as they relate to intellectual
`property, securities, business interruption, and commercial litigation matters. He has Worked
`on numerous matters before U.S. federal and state courts as Well as the International
`Chamber of Commerce, AAA, and other international forums and has provided expert
`Witness testimony in commercial disputes. Prior to its acquisition by FTI, Mr. Gerardi Was
`a partner in KPMG’s Forensic Services practice, Where he served as a member of the
`National Intellectual Property Leadership team and as the Northeast area leader for the
`intellectual property practice. Prior to joining KPMG, he was with Pricewaterhouse—
`Coopers’ Financial Advisory Services division.
`
`Mary B. Graham
`Mary B. Graham is a partner at Morris Nichols, Where she has litigated patent and other
`intellectual property matters for more than 20 years. Ms. Graham is a member of the District
`of Delaware Intellectual Property Advisory Committee and serves on the Delaware State
`Board of Education.
`
`
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 6
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 7
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`XVIII ABOUT THE AUTHORS
`
`, Lance E. Gunderson
`
`Lance E. Gunderson is a senior managing director in FTI Consulting, Inc.’s Forensic and
`Litigation Consulting practice in Houston,Texas. He is experienced not only in financial
`and litigation consultinginvolving intellectual property damages but also other business
`consulting outside of litigation. He has testified numerous times in both state and federal
`court primarily regarding damages related to IE Mr. Gunderson holds a B.S. degree in Busi-
`ness Administration (Finance emphasis) from BrighamYoung University and an M.B.A. fiom
`Texas A&M University. He is an Accredited Valuation Analyst and a member of the
`Licensing Executives Society and the National Association of Certified Valuation Analysts.
`Dawn Hall
`
`Dawn Hall is a director in the Forensic and Litigation Consulting in FTI’s NevvYorl< Office.
`In that capacity, Ms. Hall provides dispute advisory and financial consulting services to
`attorneys and corporate clients. Her experience includes various business disputes across
`many industries. The focus of her over eight years of experience has been in assisting
`clients with complex financial, accounting, and damages matters in intellectual property
`disputes. Prior to its acquisition by FTI, Ms. Hall Was a manager in KPMG’s Forensic
`Services practice focusing primarily on intellectual property disputes. Prior to joining
`KPMG, she Was with Arthur Andersen’s Dispute and Advisory Services practice.
`
`Blake Inglish
`Blake Inglish, a director in FTI Consulting’s Los Angeles office, has consulted on over 150
`matters involving accounting, economic, financial, and valuation issues. He has spent over
`10 years assisting businesses, government entities, and law firms in analyzing profits, costs,
`cash flows, market trends, valuations, relevant regulations and laws, and other necessary
`data. Mr. Inglish has experience testifying as an expert witness and has consulted attor-
`neys across a Wide variety of venues. These venues have included state and federal courts
`as Well as matters decided by Various panels such as the International Trade Commission
`(ITC) and the International Chamber of Commerce (ICC).
`
`Esfandiar Maasoumi, Ph.D.
`Esfandiar (Essie) Maasoumi is the Robert H. and Nancy Dedman Professor of Economics
`and adjunct professor of statistics at Southern Methodist University, Dallas,Texas. He is
`author and coauthor of more than 100 articles, reviews, and books, including special issues
`ofjournal ofEconometrics and Econometric Reviews. He has Written theoretical and empirical
`papers in both economics and econometrics, and consults on law and economics issues.
`He received his B.S. (1972), M.S. (1973), and Ph.D. (1977) degrees from the London School
`of Economics. He is the editor of Econometric Reviews and on the board of the North
`American Free Trade Association. He is ranked thirty—seventh in the world in the Econo-
`metricians’ Hall of Fame.
`
`Michael McAleer, Ph.D.
`Michael McAleer is Professor of Economics (Econometrics) at the University of Western
`Australia,Adjunct Professor in the Faculty of Science at the Australian National University,
`
`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 7
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` MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 8
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`
`ABOUT THE AUTHORS XIX
`
`ng, Inc.’s Forensic and
`
`1 not only in financial
`~ut also other business
`
`both state and federal
`
`2 a B.S. degree in Busi-
`
`ty and an M.B.A. from
`nd a member of the
`
`.ed Valuation Analysts.
`
`TI’s NewYork Office.
`
`zonsulting services to
`
`isiness disputes across
`has been in assisting
`. intellectual property
`in KPMG’s Forensic
`
`ites. Prior tojoining
`‘ices practice.
`
`:onsulted on over 150
`
`LCS. He has spent over
`Ialyzing profits, costs,
`, and other necessary
`. has consulted attor-
`
`1126 and federal courts
`
`11 Trade Commission
`
`afessor of Economics
`
`y, Dallas,Texas. He is
`
`Icluding special issues
`
`)1‘CtiC21l and empirical
`rid economics issues.
`
`n the London School
`
`board of the North
`
`world in the Econo-
`
`Adjunct Professor in the Department of Economics and the Department of Mathemat-
`ics and Statistics at the University of Canterbury, New Zealand, and Adjunct Professor at
`Ling Tung University, Taiwan. He has published more than 400 journal articles, chapters
`of books, monographs, edited books and edited special issues ofjournals in econometrics,
`financial econometrics, statistics, empirical finance, risk analysis and management, envi-
`ronmental modelling, tourism research, and intellectual property. He is an elected Fellow
`of the Academy of the Social Sciences in Australia and the International Environmental
`Modelling and Software Society.
`
`Matthew G. Mercurio, Ph.D.
`Matthew G. Mercurio is a director in theSan Francisco office of FTI Consulting, Inc.
`Dr. Mercurio specializes in applying microeconomic analysis and rigorous econometrics
`to policymaking, regulatory issues, and public and private litigation. His particular areas
`of expertise include computation of economic damages in competitive practices, patent/
`intellectual property, and price—fixing litigation, the use of empirical methods in market
`definition, survey design,vsampling, and survey analysis techniques. Dr. Mercurio has pro-
`vided expert advice to legal counsel, businesses, trade associations, and government agencies.
`He has developed econometric models for survey analysis, competitive analysis, damage
`estimates, and cost modeling. Dr. Mercurio received his Ph.D. in economics from Prince—
`ton University in 1996. He also holds an M.A. in Economics from Princeton and a B.A.
`in economics in mathematics from Boston University.
`
`Daniel Millimet, Ph.D.
`Daniel Millimet is an associate professor of economics at Southern Methodist University.
`He received his Ph.D. in economics from Brown University in 1999 and his B.A. in
`economics from the University of Michigan in 1994. His research is primarily in the area
`of applied microeconometrics, with topics spanning environmental economics, labor
`economics, development economics, and international trade. He teaches courses in labor
`economics at the undergraduate, master’s, and Ph.D. level and econometrics at the Ph.D.
`level.
`‘
`
`Clarke B. Nelson
`
`Clarke B. Nelson is a director in the FTI Forensic and Litigation Consulting practice and
`is based in Salt Lake City, Utah. Mr. Nelson specializes in damages and other quantitative
`analyses involving intellectual property disputes, including issues related to patents, trade-
`marks, trade secrets, and license/royalty agreements as well as other general damages
`calculations. Mr. Nelson received a B.S. in accounting from BrighamYoung University and
`an M.B.A. from the Wharton School, University of Pennsylvania, and is a Certified
`Public Accountant (licensed in Utah and Colorado).
`
`Tniversity of Western
`National University,
`
`Michael Nieswiadomy, Ph.D.
`Michael Nieswiadomy, professor of economics at the University of North Texas, received
`his B.A. from the University of Dallas (1979) and his Ph.D. in economics from Texas A&M
`
`
`
`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 8
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`

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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 9
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`XX ABOUT THE AUTHORS
`
`$100,000 in research grants.
`
`Daren M. Orzechowski
`
`tainment, media, publishing, sports, and software. In addition to assisting clients in com-
`plex licensing transactions as Well as intellectual property acquisitions and transfers, he
`represents clients in litigations involving issues of trademark, patent, copyright, trade secret,
`unfair competition, and libel law. Mr. Orzechovvski received his B.A. fromTufts University
`(1996) and his ].D., cum laude, from Fordham University School of Law (1999).
`
`and other intellectual property litigation for 24 years.
`
`Chase Perry
`
`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 9
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`

`
` MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 10
`
`ABOUT THE AUTHORS
`
`XXI
`
`River Associates and a professor at UCLA. He has a B.S. in engineering from the Uni-
`versity of Michigan, a predoctoral fellowship from Harvard University, and a Ph.D. from
`the University of Colorado.
`
`Robin C. Sickles, Ph.D.
`Robin C. Sickles is professor of economics and professor of statistics at Rice University.
`He received his B.S. in economics from the Georgia Institute ofTechnology in 1972 and
`his Ph.D. in economics from the University of North Carolina at Chapel in 1976. He is a
`member of the American Economics Association and the Econometric Society, is a fellow
`of the Handbook of Economics and the journal of Econometrics, and is cited in I/Vhok Who in
`Economics, I/Vhos Who in/lmerica, I/Vhos Who in I/I/orld, and Whos Who in Social Sciences Higher
`Education. He has authored or coauthored more than 90 articles and papers and two books.
`He has held or holds senior editorial positions with thejournal of/lpplied Econometrics, Com-
`munications in Statistics:Theory and Methods, Southern Economic]ournal,_]ournal ofBusiness and
`Economics Statistics,journal QfEconometrics, and Empirical Economics. He is editor—in—chief of
`the journal of Productivity Analysis and a director in the Houston office of LECG, LLC.
`
`Daniel Slottj e, Ph.D.
`Daniel Slottje has provided consulting services to clients in various industries. He has sig-
`nificant experience in litigation consulting, including economic damages and statistical
`issues. In addition to advising counsel, he has provided testimony in these matters as well
`as in others. Dr. Slottje is a professor of economics at Southern Methodist University in
`Dallas,TeXas, and a senior managing director With FTI Consulting. He has published more
`than 120 articles and written books on many economic issues.
`
`Marion B. Stewart, Ph.D.
`Marion B. Stewart is a senior Vice president at NERA and chaired NERA’s intellectual
`property practice between 1996 and 2006. His interest in the economics of intellectual
`property began with his doctoral dissertation on industrial research and development and
`has ranged from fundamental economic research on “preemptive innovation” to practical
`calculation of the value of patents and trademarks. His analysis of large—firm research and
`development rivalry, published in the Quarterly journal of Economics, was a seminal investi-
`gation of the impact of mandatory licensing and other profit—sharing mechanisms on the
`rate of innovation. At NERA, his IP practice has focused on the valuation of patents and
`trademarks, consideration of the commercial success of patented inventions, and the cal—
`culation of economic damages resulting from alleged infringement. He has investigated
`the importance of IP in numerous industries.
`
`Ryan Sullivan, Ph.D.
`Ryan Sullivan is the chief economist of Quant Economics, Inc., and is an expert in eco-
`nomics, finance, and statistics. Dr. Sullivan applies his skills in three areas: litigation
`
`rurnals. He has been a
`
`ality, the Texas Natural
`)ffice, and the Harris-
`
`:he Dallas Economists’
`
`natural resource eco-
`
`id he has received over
`
`e & Case LLP in New
`
`ding electronics, enter—
`
`sisting clients in com-
`
`tions and transfers, he
`copyright, trade secret,
`. from Tufts University
`f Law (1999).
`
`Iourt of Chancery on
`rsons was a partner at
`
`e specialized in patent
`
`isulting practice and
`oviding financial and
`
`:es, particularly those
`: witness, filed expert
`
`/Iorris Nichols, where
`:1 as an extern for the
`reme Court.
`
`l1’1Cl business consult-
`
`and economic analy-
`ion, business strategy,
`L01‘ of the chapter on
`erence for economic
`
`tual property at the
`esident with Charles
`
`
`
`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 10
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`

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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 11
`ABOUT THE AUTHORS
`
`XXII
`
`
`
`...J
`
`consulting, business consulting, and financial markets. On the litigation front, he pro-
`vides expert economic analysis for disputes involving intellectual property and tech-
`nology, antitrust and unfair competition, financial markets and services, and other
`commercial litigation. For businesses, Dr. Sullivan assists companies in licensing tech-
`nology and valuing assets. In the financial markets arena, he develops and applies sta-
`tistical models for active investors. Dr. Sullivan earned his B.A., M.A., and Ph.D. in
`
`economics from the University of California, San Diego. Dr. Sullivan is committed to
`research and analysis that consistently produces reliable results.
`
`David Teece, Ph.D.
`
`David Teece is an applied industrial organization economist who has studied and consulted
`on issues on technological change, technology transfer, and intellectual property for over
`two decades. He is the Mitsubishi Bank Professor at the Haas School of Business at
`
`University of California, Berkeley, Where he also directs the Institute of Management,
`Innovation and Organization. He is also chairman of LECG, a publicly traded expert serv-
`ices firm. Professor Teece has a Ph.D. in economics from the University of Pennsylvania
`and has held teaching and research positions at Stanford University and Oxford Univer-
`sity. He has authored over 150 books and articles including “When is Virtual Virtuous?
`Organizing for Innovation” (with Hank Chesbrough), “Profiting from Technological Inno-
`vation,” and Managing Intellectual Capital.
`
`Vincent A. Thomas
`
`Vincent A. Thomas is a senior managing director in FTI’s Forensic practice in Chicago
`and serves on FTI’s National Intellectual Property Leadership team. He has over 15 years
`of experience assisting companies and plaintiffs’ and defendants’ counsel with complex
`economic, financial, accounting, and valuation issues and specializes in matters involving
`intellectual property including patent, copyright, trade secret, and trademark. He has con~
`ducted several complex studies of damages and on several occasions has provided expert
`testimony in U.S. federal and state courts as well as at arbitration. Prior to its acquisition
`by FTI, Mr. Thomas was a partner in KPMG’s Forensic Services practice, Where he served
`as a member of the National Intellectual Property Leadership team. Mr. Thomas has
`also served in corporate financial and management positions, including director and chief
`financial officer.
`
`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 11
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`

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` MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 12
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`CHAPTER 9
`
`
`
`Commercial Success:
`
`Economic Principles Applied
`E
`|...1
`
`.J ESS E DAV! D
`
`NERA Economic Consulting
`
`MARIO N B. STEWART
`
`NERA Economic Consulting
`
`I
`
`‘
`
`A. party accused ofinfringing a patent may contend that the asserted patent is invalid
`because of obviousness. To help evaluate that issue, courts may consider Whether the patented
`invention is a “commercial success.” Determining Whether an invention has, or has not,
`been a commercial success is primarily an economic exercise, and economists increasingly
`I assist courts in evaluating this issue. Case law indicates that courts have traditionally
`(1) looked at such factors as increasing revenues, gain in market share, and public acclaim
`in an attempt to determine Whether a product has been a commercial success and (2) con-
`sidered whether the patent holder has established a “nexus” between the claimed inven-
`tion and the
`roduct’s commercial success. In this cha ter We discuss these tests and
`P
`Consider them alongside another test suggested by economic principles, namely, Whether
`the patented invention has earned or can be expected to earn a positive net return on
`Invested capital after accounting for all the relevant costs associated with developing and
`Commercializing the product. We analyze the commercial success standard in the context
`of two recent cases in which We applied these principles.
`
`.
`
`INTRODUCTION
`
`A Party accused of infringing a patent may contend that the asserted patent is invalid
`ecause of obviousness. That contention may be rebutted by a showing that the patented
`-
`.
`.
`.
`.
`mention 1S a “commercial success’’— one of several“secondary considerations” that courts
`
`i
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`I59
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`
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`MYLAN PHARMS. INC. EXHIBIT 1121 PAGE 12
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`

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` MYLAN PHRMS. INC. EXHIBIT 1121 PAGE 1 I
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` i ii
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`i i i l i E i 2 3
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`.
`i
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`l ii
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`’ i ii
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`I60 ECONOMICS or PATENT DAMAGES
`
`look to for identifying the differences between the patented invention and the prior art
`These secondary considerations—known as objective indicia of nonobvi0usness\a1 '
`50
`include such factors as copying, long felt but unsolved need, failure of others, and licensi
`I1g_2
`Determining whether an invention has, or has not, been a commercial success is
`.
`.
`.
`.
`.
`.
`.
`.
`Pri~
`marily an economic exercise, and economists increasingly assist courts in evaluating this
`issue. Case law indicates that courts have traditionally looked for such characteristics as
`increasing revenues, gain in share in an appropriately defined market, and public acdai
`in an attempt to determine whether a product has been a commercial success. Courts have
`also considered whether the patent holder has established a “nexus” between the claimed
`invention and the product’s commercial success—that is, whether the commercial success’
`if evident, is due to the patented feature as opposed to some other characteristic of the
`product or mode of selling employed by the manufacturer.
`From an economic perspective, commercial success could in principle be defined by a
`single criterion: Does the patented invention earn a positive net return (risk—adjusted) on
`invested capital after accounting for all relevant costs associated with developing and cnmn
`mercializing the patent as well as any alternatives available to the patent holder? Patentg
`exist to protect the human and financial investment used to develop new products, serv_
`ices, or processes. This investment, however, is beneficial, from a social perspective, only if
`consumers are willing to purchase an embodiment of the invention at such a price as to
`fully compensate the inventor for all costs incurred in bringing the product to market.3 Put
`simply