damages and valuation for internet ip infringement and defamation - nevium
DESCRIPTION
Understanding how to quantify economic damages related to Internet defamation and infringement enables attorneys to achieve better results for their clients. Whether dealing with defamatory statements appearing on first page search results, or copyright, trademark and rights of publicity infringement; understanding the tools and methodologies available for calculating damages is critical in litigating today’s Internet and social media disputes.TRANSCRIPT
Damages and Valua-on for Internet IP Infringement
and Defama-on
Brian Buss and Doug Bania
Internet Law Leadership Summit, May 23, 2014
2 Internet Law Leadership Summit, May 23, 2014
A Financial and Economic Perspec-ve on Internet & Social Media IP Introduc-on
Internet & Social Analysis
Intellectual Property Analysis
Bringing Them
Together
3 Internet Law Leadership Summit, May 23, 2014
Internet & Social Media Analysis
Internet & Social Analysis
Intellectual Property Analysis
Bringing Them
Together
Internet Law Leadership Summit, May 23, 2014 4
Old Misuse Tradi-onal Media
New Misuse Search & Social
Obvious misuse in television and Print
Internet misuse can be hidden in metadata and keywords
The number of people witnessing the misuse is geographically
constrained
Worldwide audience and the potenFal of misuse going viral
How many customers actually took acFon is not accurate
Data regarding how many customers took acFon
is very accurate
Old World vs. New World Infringement Internet Misuse Can be Accurately Measured and Quan-fied
Internet Law Leadership Summit, May 23, 2014 5
Search Appear on first page organic search results for defined
keywords
Op-miza-on Strategically leverage keywords for
first page search results in Search and Social Media
Social Media Build a following.
Create shareable content. Go viral.
Analy-cs Measure and refine op-miza-on
tac-cs to create more website traffic
Key Concepts of Internet Use: Business Owner
The Internet is the new corner store and the foot traffic is Search & Social
Internet Law Leadership Summit, May 23, 2014 6
Search What is your organic ranking
for specific keywords? How did you get there?
Op-miza-on Keywords, tags, metadata vs. visible content
How, where & why IP is used?
Social Media What is your handle? What is your topic of
conversa-on?
Analy-cs Iden-fy & Quan-fy
site traffic Impact of key words
Key Concepts of Internet Analysis Search + Social + Op-miza-on + Analy-cs = Defensible Tes-mony
Internet Law Leadership Summit, May 23, 2014 7
Educa-ng the Trier of Fact Educate first in order to get set the stage for damages
Internet Damage Experts Must Educate the Judge and Jury
Regarding the Basics of Search & Social Prior to Approaching Damages
Internet Law Leadership Summit, May 23, 2014 8
Growing importance of the Internet for businesses The Internet is a huge place to promote business Search and How it Works Internet as a huge library with billions of books, Search engines are the tools to find informaFon Importance of First Page Search Results First page is worth the fight Use of Metadata and Op-miza-on First page search results are not an accident Use and Leverage of Google Analy-cs Google provides tools and tacFcs
Educa-ng the Trier of Fact Any Internet valua-on or damages calcula-on starts here
Internet Law Leadership Summit, May 23, 2014 9
Two compeFng construcFon supply
companies had operated in non-‐overlapping geographies
Both businesses evolved into online retail &
distribuFon of construcFon supplies and design
concepts
Therefore businesses begin to overlap and compete for customers outside their
home geography
Example: Educa-ng the Trier of Fact
Situa-on: Defendant used the Plain-ff’s TM-‐protected company name in search op-miza-on and social media
10 Internet Law Leadership Summit, May 23, 2014
First page of organic search results
PlainFff: First organic result
Defendant: Second and Third organic search result
Of the 9 organic search results, over 50% are for the Defendant
Defendant: Social Media sites
PlainFff’s paid result
PlainFff: Ninth organic result
Educa-ng: Importance of Search & Social
11 Internet Law Leadership Summit, May 23, 2014
Tac-c Use at SampleCompany.com Likely Result
Use key terms in Title Tag
<Ftle>The Company, Sales and Structure Designs</Ftle>
The Ftle tag “The Company” alerts both the search engines and the user as to the topic of that parFcular page
Use key terms in the URL
h]p://www.sample.com/about-‐the-‐company This URL contains the keywords “The Company” which provides users and search engines more informaFon about the page
Use key terms in the Descrip-on
meta name="descripFon" content=”;The Company has been selling since 1972. Click here to find out more about sales, structure and The Company." />
The descripFon meta tag provides the search engines a summary of what the page is about
Use key terms in the Keywords
<meta name="keywords" content=”sales, structure, the company, green supplies, The Company, Sample Company, samplecompanuy" />
If a search engine finds specific key terms throughout the content of the website and in the keyword meta tags, that website will likely be ranked higher in search results
Educa-ng: Analyze Code to Determine SEO The site’s code can be “read” to inves-gate SEO strategies
12 Internet Law Leadership Summit, May 23, 2014
Tac-c Use at SampleCompany.com Likely Result
Use key terms in Anchor Text
<a href="h]p://www.SampleCompany.com/about-‐the-‐company">About The Company</a> <a href=h]p://www.SampleCompany/the-‐company-‐brochure>SampleCompany Brochures</a>
Anchor text are the clickable hyperlinks that users click on to be taken to a different page of a website Using “the-‐company” in the anchor text tells users and search engines that the page is about “The Company”
Label images & graphics using key terms
<img src="/upload/thecompany.jpg" alt="" width="137" height="200" align="leh" border="0" hspace="6" />
Including key terms in the name of an image allows the Google search engine to show the image in Google Image search results
Using IMG ALT tag to label image with keywords
<img src="/upload/thecompany.jpg”><img alt=“The Company”width=”157" height=”220" align="leh" border="0" hspace=“4”/>
IMG ALT Tag provides a clear text alternaFve of the image for screen reader users Anyone searching for the phrase “The Company” may find the photo is a search and click to the website
Links to social media accounts
<a href="h]p://www.facebook.com/the_company" target="_blank"><span style="font-‐family: Trebuchet MS;">The Company on Facebook</span></a> <a href="h]p://www.twi]er.com/the-‐company/" target="_blank">The Company on Twi]er</a>
When a Googlebot crawls a website, it will noFce social links and typically associate the social profiles with you company. Posts and comments placed on those social accounts will likely rank you for specific keywords showing up frequently in your follower’s posts
Use key terms in the page’s text
The phrase “the company” has been also been placed 14 Fmes in the text of the page
Key terms throughout the page should be used so that search engines can determine the content of the page matches the Ftle, descripFon, and URL
The site’s code can be “read” to inves-gate SEO strategies Educa-ng: Analyze Code to Determine SEO
13 Internet Law Leadership Summit, May 23, 2014
IP Valua-on & Damages for the Internet
Internet & Social Analysis
Intellectual Property Analysis
Bringing Them
Together
Internet Law Leadership Summit, May 23, 2014 14
Important to base new analyses on accepted methodologies
Standard Methodologies Internet IP Methodologies
Cost Approach
Cost to replace or replicate • Relief from pay per click • Value of impressions
Income Approach
Present Value (PV) of future benefits • Discounted cash flows (DCF) • Relief from Royalty • Lost Profits / Unjust Enrichment
PV of • AddiFonal Site Visits / Traffic • AddiFonal online transacFon or
customer inquiries
Market Approach
Study of transacFons • Guideline companies • Guideline transacFons • Industry benchmarks
• Comparable Pay Per Click • HypotheFcal license/transacFon
Analysis of the financial / economic impact of IP Assets on the Internet will employ one or more of these methodologies
IP Valua-on & Damages Methodologies
Internet Law Leadership Summit, May 23, 2014 15
IP analysis starts with identifying and understanding the IP assets being used
Understanding the IP Assets
Internet Law Leadership Summit, May 23, 2014 16
Types of IP assets oden misused through Internet-‐based mechanism each have unique implica-ons for valua-on and damages analysis
Assets
Misuse boils down to infringement or defama8on
Analy-cal Considera-ons
Trademark & Brand
• Is the TM used in unseen components of the website? • Is the TM used to drive search results • What was the exposure to defamatory comments or posts?
Copyright • Did the protected content drive traffic? • Was the image or content a contributor to a sale or transacFon?
Name & Likeness • Did the use drive traffic? • Was the use akin to an endorsement?
Domain Names • Is there a website and how much direct traffic does site receive? • How many monthly searches occur using this term?
Understanding the IP Assets
Internet Law Leadership Summit, May 23, 2014 17
Mechanisms
Paid Search
Organic Search
Social Media
Squafng
Infringement
Defama-on
Claims Economic Result
Unjust Enrichment: Incremental profits achieved by Defendant due to the misuse
Lost Profits: Incremental profits not achieved by PlainFff due to the misuse
Pay-‐per-‐click relief: Value of cost, effort avoided due to misuse
Decrease in Value of an IP Asset: Impact on value due to misuse
Regardless of the asset type, the claims made in Internet cases typically occur through one or more mechanisms and the economic results can typically be
measured in 4 ways
Internet Damages Matrix
Internet Law Leadership Summit, May 23, 2014 18
Explain the mechanism, then quan8fy the impact
Unjust Enrichment Profits: Traffic at Defendant’s Website
Using Google Analy-cs to Support Unjust Enrichment
Monthly visits due to searches using TM 25,000
RaFo: Visitors who purchased 25%
TM search purchases 6,250
Average e-‐commerce purchase $250
Incremental revenue 1,562,500
RaFo: Incremental profit margin 15%
Incremental profit per month 234,375
Internet Law Leadership Summit, May 23, 2014 19
Using Social Media Analy-cs to Support Lost Profits
Use Accepted Methodology Lost Profits damages = But-‐for less As-‐is
Use of Social Media Data • “ReacFons” to defamatory posts and tweets • Language from posts seen in customer emails
20 Internet Law Leadership Summit, May 23, 2014
Using Google Analy-cs in Name & Likeness Claim
Monthly Pageviews at Defendant’s Website
Search Term Analysis
Top 50 search terms do not include Celebrity’s name
Top 50 search terms yielded 49% of total site visits during the Damages Period
Search terms using Celebrity’s name resulted in a total of 45 visits during the Damages Period, less than (0.004%) Website traffic declined during the
Damages Period
Internet Law Leadership Summit, May 23, 2014 21
Google AdWords for Celebrity’s Name
Social Media Presence for 12 Comparable Celebri-es
CELEBRITY’s social media presence was greater than comps
Price was less than Google PPC but equal to Facebook CPC
Using Social Media Data in a Market Approach
Google Facebook & FB Adver-sing Twioer
Google Search Results
Average Monthly Searches (Google)
Average Pay Per Click Rate
($/Click) Likes Size of
Audience
Cost Per Click (CPC)
CPC Suggested
Cost Per Thousand Impressions
CPI / 000 Suggested Tweets Followers
Name 1 10,800,000 27,100 $0.00 2,232,238 620,000 0.51 0.30-‐0.68 0.28 0.05-‐1.36 1 15,434
Name 12 42,700,000 165,000 $1.73 10,410,432 2,800,000 0.49 0.29-‐.0.69 0.09 0.3-‐0.64 94 1,894,518
Average 133,600,000 439,157 $0.90 7,992,695 2,210,286 $0.52 $0.22 9,135 1,851,757
Median 42,700,000 165,000 $0.79 8,573,831 720,000 $0.49 $0.18 1,755 187,591
CELEBRITY 244,000,000 301,000 $1.99 34,714,592 5,400,000 0.75 0.30-‐0.71 0.16 0.04-‐1.11 10,611 7,394,012
Search Terms
Avg. monthly searches CompeFFon Suggested
bid
Celebrity 673,000 Low $0.75
Internet Law Leadership Summit, May 23, 2014 22
Value of YouTube and Facebook Impressions
YouTube 4 videos posted on the CELEBRITY’s channel received over 2 million views Total viewership (an acFve response), mulFplied by the Google AdWord rate
Using Social Media Data in a Relief from Pay Per Click
YouTube Ac-vi-es Viewers
CELEBRITY Presents PRODUCT at CES 454,134
CELEBRITY comes to the CNET stage (CNET) 96,462
CELEBRITY Calls Name 1,188,608
CELEBRITY in Las Vegas introduces PRODUCT 372,067
Total YouTube Impressions 2,111,271
$Value / Impression $0.75
Value of YouTube Ac-vi-es 1,583,453
Internet Law Leadership Summit, May 23, 2014 23
Value of YouTube and Facebook Impressions
Facebook ReacFons are Likes, Comments and Shares
A ReacFon is an “acFve” response to the Celebrity’s post, and is more valuable than a view
Using Social Media Data in a Relief from Pay Per Click
A Response is more valuable than a view
Likes for CELEBRITY's Facebook page Likes Cost Impression Price ($/1000 impressions) 34,714,592 $0.16 Click Price ($/Click) $0.75 Reac-ons to Posts Involving the Products Likes Comments Shares Visit www.product.com make sure to like! 28,921 7,432 657
CELEBRITY Presents PRODUCT 17,528 1,425 412
CELEBRITY in Vegas Introducing PRODUCT . . . 18,256 312 514
Total 64,705 9,169 1,583
Value of Ac-vity Count Cost Value ($) Net Page Likes 34,649,887 $0.00016 5,544
Post Likes 64,705 $0.75 48,529
Other ReacFons 10,752 $0.75 8,064
Value of Facebook Impressions 62,137
24 Internet Law Leadership Summit, May 23, 2014
Bringing Them Together
Internet & Social Analysis
Intellectual Property Analysis
Bringing Them
Together
Internet Law Leadership Summit, May 23, 2014 25
What’s known about Search & Op-miza-on • “It’s Google’s algorithm” there are mulFple versions of best pracFces and no pracFFoner
knows exactly how search engines actually select and place websites
Understand the Context of the Calcula-on • Just because a number was calculated, doesn’t mean the number is relevant
• Replacement cost based on pay per click can indicate the value of Fme and effort replaced, but not necessarily the value of brand or TM
• The IP Asset may not be the most important asset for apporFonment
• Don’t fall for: using a 10% industry royalty the TM is worth more than the enFre business
• Visits due to a TM-‐based search indicates number of visits, not necessarily profits
The Data is available, but it may not always support the claims
Challenges for the Expert
Concluding Comments
Internet Law Leadership Summit, May 23, 2014 26
• The Internet and Social Media markeFng world requires educaFng the trier of fact before proceeding to the quanFtaFve analysis;
• The Internet MarkeFng World is less understood, but offers many advantages for financial and economic analysis (there is defensible evidence if you know where to look, and how to explain it)
• Using the analyFcal advantages available from Internet & Social Media markeFng allows compelling Expert Analysis (The Proof is available)
• Be aware of the limits of your calculaFons
Internet and social media data analysis provides addi8onal tools for the Art & Science of Valua8on
Our Top Take-‐Aways
Concluding Comments
27 Internet Law Leadership Summit, May 23, 2014
Addi-onal Slides
A Deeper Look at the Toolkit
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Drivers of Value
Business Value > Value of IP Assets owned by the Business
Appor-onment: IdenFfy the porFon of future benefits derived from use of the IP Assets
Present Value of Expected Future Benefits
Value of Business
Intangible Assets
Tangible Assets
Copyrights
Patents
Intangible Assets Tangible Assets
Trademark
IP depends on other assets and resources in order to generate economic benefits
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• Website Analy-cs • Social Media Analysis • Scoring Analyses • Company Language Analysis • Comparable licensing transacFons (“CUT”) • Excess profits (“CPM”) • Feature count and comparison • MarkeFng Mix Analysis • PromoFonal Use Analysis • Surveys / Interviews /Focus Groups
Tools to Appor-on Economic Benefits
Appor-onment Framework
How big is this box?
Always best to use mul8ple tools
Internet Analy-cs as an Appor-onment Tool
Present Value of Expected Future Benefits
Value of Business
Intangible Assets
Tangible Assets
Copyrights
Patents
Intangible Assets Tangible Assets
Trademark
Internet Law Leadership Summit, May 23, 2014 30
It boils down to appor8onment
Key Concept: Appor-onment