A previous blog discussed the subject of remedies for patent infringement. In that post, I discussed the subject of patent damages in an abbreviated manner. I would like to discuss the various measures of damages for all areas of intellectual property (IP) in more detail in the next series of blogs.
The series will focus on compensatory damages and will not discuss enhanced damages or other remedies, such as injunctions or seizure.
This series will start with damages for patent infringement, continue with damages for trade-secret misappropriation and copyright infringement, and conclude with trademark infringement.
The determination of patent damages is essentially uniform throughout the U.S. because substantive patent law is exclusively federal law. Additionally, a single circuit court handles all patent appeals from federal district courts.
Patent damages are measured by two methods: the determination of lost profits (upper estimate) and the determination of a reasonable royalty (lower estimate). The court may also award the patentee an intermediate sum between the upper estimate and the lower estimate. Patent owners who establish infringement are, at a minimum, entitled to a reasonable royalty.
The reasonable royalty award can be based upon an established royalty, which is a royalty that a patent owner has obtained by licensing the patent or patents to other parties. The fact that any pre-litigation licensing activity can set a benchmark for future patent damage awards should be a consideration by any patent owner who is planning to license his or her patent and anticipates enforcing his or her patent at a later date.
The owner of a design patent can also collect damages in the form of the infringer’s profit. These damages were discussed in my March 2, 2017 blog post concerning the Supreme Court’s decision in Samsung Electronics Co., Ltd. v. Apple, Inc., 580 U.S. ___ (Dec. 6, 2016).
Patent damages awards in the U.S., generally, are limited to damages for activities that occurred in the U.S. As indicated in my July 26, 2018 blog post, however, it is possible to characterize certain activities that occur overseas in a manner that will allow the patent owner to collect damages through the U.S. court system.