In reality, then, the statute provides only one category of patent damages – those "adequate to compensate for the infringement." The statute does, however, set a floor for what constitutes adequate damages – they may be "no...less than a reasonable royalty." The statute also requires courts, as a part of the damages award, to fix interest and costs against the infringer. In addition, the statute provides that the court can increase damages up to three times the amount found by the jury or assessed by the court. Finally, the statute expressly allows the use of expert witnesses to determine what type of damages to award and to help the jury or court arrive at a reasonable royalty.
The courts have created another form of damages, in addition to the minimum of a reasonable royalty, that may adequately compensate – namely, profits lost by the patent holder due to infringement. Because lost profits damages frequently exceed the amount of a reasonable royalty, patent holders seek lost profits whenever they are recoverable. A hybrid damage award – a split between lost profits and generally reasonable royalty – is also permissible in certain circumstances. The profits the infringer made from the infringement, however, are not permissible damages under the patent statute. Such an award was abolished by the Patent Act of 1946. (The only exception is design patent cases, in which the infringer's profits are recoverable.)
The law of patent damages has come to the forefront, as juries have increasingly awarded large sums for patent infringement. From 1991 to 1996, there were at least eight cases in which patent damages exceeded $100 million. Since then, the number of damages awards that have reached eight – and even nine – figures have steadily risen. Indeed, patent cases now make up a significant number of the largest jury awards in the United States.
Patent Law Topics
Click on any of the following links to see more information on a variety of patent damages topics. These pages also include links to relevant court opinions .
Patent Damages Blog- Chris Marchese and Justin Barnes have a patent damages blog with frequent updates on the fast moving world of patent damages. Be sure to visit and follow the blog. You can also follow their damages updates on Twitter, www.twitter.com/patentdamages.
Patent Damages Primer - This page offers an overview on the basic damages-related issues, including lost profits, reasonable royalty, prejudgment and post-judgment interest, limitations on damages, and enhancement of damages.
Reasonable Royalty Methodologies - Courts have applied a variety of methodologies to determine what constitutes a reasonable royalty. This page discusses some of the methodologies.
Patent Reexamination-The number of patent reexaminations sought by defendants in patent litigation is on the rise. Courts frequently stay the litigation when the Patent and Trademark Office grants reexamination, delaying the determination of infringement and validity and hence damages, which can extend the damages period significantly. In addition, if reexamination results in amendment or cancellation of the claims in litigation, an award of damages may be reduced or negated. This link takes you to another section of our website that addresses reexamination issues as they relate to damages.
Prejudgment & Post-Judgment Interest - This page discusses the general principles of prejudgment and post-judgment interest and several cases that underscore the potential importance of prejudgment to the overall damages award.
Supplemental Damages - Waiver - This page discusses cases that have found waiver of ongoing damages that arise after the last date of infringing activity presented to the jury, that is, damages that arise between the last act of infringement presented at trial through the trial and thereafter. these cases have found waiver of such damages due to defects in the plaintiff's key damages pleadings.
Single Damages Verdict, Multi-Patent Case - In some district court actions, the jury is asked to issue a single damages verdict for multiple patents. This page addresses what may happen to the damages verdict if, on appeal, the Federal Circuit reverses liability on less than all patents for which damages were awarded.
Patent Damages Legislative Reform - This reform would modify 35 U.S.C. § 284 in several respects. The preceding link takes you to the damages-specific web page that summarizes the efforts to amend the damages statute. To view Fish & Richardson's general web page on Patent Law Reform, click here.
Patent Damages Myths – This page addresses a number of “myths” related to patent damages. Several myths are identified from the patent owner’s perspective and several from the infringer’s.
Permanent Injunction – The Supreme Court’s 2006 decision in eBay v. MercExchange has begun to ripple through the patent community. The presumptions about granting permanent injunctions in patent cases have been shattered, and the traditional four-prong test in equity for deciding permanent injunctions in other areas of law will now once again be applied in the patent context. This link takes you to another section of our website that discusses recent cases and provides updates in this evolving area of the patent law. Click here to see our page summarizing recent eBay cases.
Damages for Unpatented Items/Entire Market Value Rule - Patent damages for unpatented items are potentially recoverable in the following situations: (1) the patent holder seeks damages based on an entire machine where the patent covers only a single component of the machine; (2) the patent holder seeks damages for lost sales of unpatented goods sold along with the infringing device (known as "convoyed sales"); (3) the patent holder seeks damages for sales of spare parts for the infringing machine. The entire market value rule, which is sometimes the name given to the first situation but in reality applies to all three, has become increasingly important in recent years and has been discussed as part of patent damages reform currently being considered in Congress (see link above).
Foreign Sales (Coming Soon!) - In certain circumstances, an infringer may be liable for damages related to sales outside the United States. This page discusses some important issues and case law on foreign sales.
Post-Judgment Royalties (Coming Soon!) - After winning a patent infringement case, if a permanent injunction is not entered, the patent owner may attempt to force the infringer to pay an ongoing royalty for any sales of infringing product post-judgment. (This ongoing royalty obligation is incorrectly referred to as a compulsory license.) Courts have even asked the jury to decide an ongoing royalty rate for patent infringement. The state of the law in this area is evolving, and this page addresses issues and cases related to this topic.