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Supplemental Damages- Waiver

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Litigation

Post-Grant

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In most cases where the infringement is ongoing, the damages presented at trial can never be entirely current. Instead, after trial, the prevailing patentee assumes it is entitled to such additional damages and seeks an accounting for the missing infringing sales up until the entry of judgment. See e.g., Itron, Inc. v. Benghiat, 2003 WL 22037710, at *15 (D. Minn. Aug. 29, 2003).1

This assumption appears to be well grounded in the statute and in the case law, which requires full compensation for all the infringement that has occurred. See General Motors Corp. v. Devex Corp., 461 U.S. 648, 654-5 (1983). Accordingly, most courts routinely grant such a motion and conduct an accounting to determine such supplemental damages.

A minority of courts have taken a much stricter procedural view. They will allow an accounting only if the patentee expressly requested it in the complaint or at least in the pretrial memo. Otherwise, they may hold that the request for such a supplemental accounting has been waived. See Braintree Laboratories, Inc. v. Nephro-Tech, Inc., 81 F. Supp. 2d 1122 (D. Kansas 2000); Lucent Technologies, Inc. v. Newbridge Networks Corp., 168 F. Supp. 2d 269 (D. Del. 2001); Tristrata Technology, Inc. v. ICN Pharmaceuticals, Inc., 2004 WL 769357 (D. Del. April 7, 2004); Phillips Electronics North America Corp. v. Contec Corp., 2004 WL 1622442 (D. Del. July 12, 2004).

Regardless of whether these decisions are correct (or whether or not such supplemental damages can still be recovered in a follow-up lawsuit),2 it appears that the issue can be avoided by adding language like the following to each complaint in the list of demands:

“an accounting for infringing sales not presented at trial and an award by the court of additional damages for any such infringing sales.”

In addition, a plaintiff may decide to list this as an issue in all pretrial memoranda and/or pretrial orders. These waiver cases seem to indicate that the latter alone is sufficient to avoid the waiver. Doing both, however, would appear to eliminate any such waiver issue in these courts. By the same token, a defendant, particularly in Delaware, may wish to examine the plaintiff’s pleadings to ensure the plaintiff has adequately pleaded supplemental damages.

The Federal Circuit, without referencing the case law cited above, seems to have foreclosed this waiver argument for supplemental damages. In Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197 (Fed. Cir. 2010), the court considered plaintiff’s appeal for damages from the date of the final judgment through institution of the permanent injunction – which in this case was 17 months. The district court had awarded damages up to entry of final judgment, but apparently Finjan did not receive damages for the additional 17 months up to entry of the injunction. The Federal Circuit concluded that the “district court should have awarded compensation for any infringement prior to the injunction.” Id. at 1213. In the process, the court rejected Secure’s argument that Finjan waived its right to further damages because its amended complaint only sought damages “as it shall prove at trial,” id.; the complaint did not request an accounting for post-trial damages. According to the court, “nothing in this statement forfeited the right to prove damages for sales that occurred after trial.” Id. The court also relied on the fact that Finjan’s complaint sought “[s]uch further and other relief as the Court and/or jury may deem proper and just.”

1Supplemental damages for post-judgment infringement is a separate issue. This topic will be covered in the future in a related damages web page titled “On-going Royalty/Compulsory License.”

2The rulings finding waiver do not expressly hold that the right to such damages has been waived. It may be that even if there is a waiver, such damages could still be recovered in a follow-on suit. In fact, this procedure apparently has been used by some Texas courts. See, e.g., z4 Technologies, Inc. v. Microsoft Corp., 434 F. Supp. 2d 437, 494 (E.D. Tex. 2006).


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Supplemental Damages- Waiver

Supplemental Damages- Waiver Team