Patent Law Practice Center

Contemporary Issues in Patent Royalty Damages

Written by our friends at Kilpatrick Stockton, E. Danielle Thompson Williams and Leslie T. Grab, Ph.D..

TMI:  How Much Settlement Information is Too Much Settlement Information?

I. Introduction

“Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty.”[1]  Damages are a hotly contested issue in nearly every patent litigation.  Patentees have traditionally had three remedies available to compensate for patent infringement:  lost profits; an established royalty; or a reasonable royalty.  Each of the remedies considered unique information on which a patentee could rely in establishing a damages award.  When requesting a reasonable royalty, patentees also often relied on the entire market value rule as another tool to determine the amount of the damages award.  However, a recent string of cases has changed the methodologies for determining a reasonable royalty as well as the standard for using the entire market value rule.  These cases put both the district courts and patent litigants on notice that the standards for establishing damages have been tightened.  Patentees must now “carefully tie proof of damages to the claimed invention’s footprint in the marketplace.”[2]  These decisions have benefits and risks for both plaintiffs and defendants in litigation that include both settlement strategies as well as expert testimony. (more…)