What is econometrics?
Econometrics is the application of statistical methods to economic and financial data, utilized for quantifying and rebutting
economic damages claims.
The “workhorse tool” of econometrics
Regression analysis is often used by econometricians to estimate economic relationships and to test economic theories. Ordinary least squares (OLS) regression is frequently used, subject to the model’s assumptions and availability of data.
Ordinary least squares – linear regression
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| Under certain conditions, the omission of relevant variables can bias regression results. Courts have excluded regression analyses that are subject to omitted variables bias. | The sample should be representative of the population of interest, with courts excluding analyses based upon “cherry-picked” samples. | |
How can regression analysis be used in Intellectual Property disputes? » To explore relationships among variables, such as between costs and sales and between price and the availability of a patented feature. » To get a yes-or-no answer to a question, for example whether the use of a patented feature is associated with an increase in profitability. » To make predictions via forecasting, for instance to test whether predicted sales were lower than sales achieved. |
Which regression models used by experts have been accepted by courts? Courts have accepted testimony based on a variety of regression models. Practitioners should be mindful of both the underlying assumptions of each model and the availability of the data required to run the model.
Regression models to consider: » Differences-in-differences regression » Structural break tests » Time series regression and forecasting |
