What are Patent Infringement Damages



Picture1Patents and Patent Infringement

The granting of a property right to its inventor is called a patent. This patent is issued through the United States Patent and Trademark Office. A patent has a 20-year term from when the application for patent was originally filed in the United States. In some special cases, it can be from the date that a related application was filed.

An infringement of a patent is where unauthorized production, use, or offering for sale products that, within the United States or its territories, incorporate patented inventions.

Should a patent be infringed, the patentee is able to sue in an appropriate federal court by way of a patent damages expert. If the defendant is then found to be liable of an infringement, the owner of the patent is at liberty to request any of a number of remedies which include: reasonable royalties, lost profits, and prejudgment interest.

Preliminary Injunctions

In accordance with the principles of equity, courts can grant injunctions so as to prevent a plaintiff’s rights from being violated. The injunction serves to prevent future infringement or indeed, to preserve the status quo pending the trial.

A Federal District Court Judge can grant an injunction which is a right of the IP owner. The two types of injunctive relief are preliminary and permanent.

Prior to an action’s final judgment, courts have powers to issue an injunction. Courts are instructed through case law to consider the following whenever a preliminary injunction is being weighed:

  • Whether the movant, given the merits, has a reasonable likelihood of success
  • Whether the movant, given that the injunction does not issue, may suffer irreparable harm
  • Whether the plaintiff is favored by the injunction
  • Whether the granting of the injunction is in the publics’ interests

Of the four requirements, likelihood of success given the merits is usually the most contended. A strong showing on behalf of the defendant that the patent-in-suit/s are not being infringed can forestall a preliminary injunction.

Defendants must demonstrate that the patent is invalid. A judge may be reluctant to permit a preliminary injunction based on the question of validity.

Irreparable harm is whereby damage is caused to the patent owner which, post-trial, cannot be compensated through a monetary damage award.

Balance of hardship is whereby the harm to the plaintiff is weighed, given that an injunction is not granted, against the harm that will be caused to the defendant through the granting of an injunction.

Public interests takes into account general welfare of society or common well-being. The court must weigh exactly how public interest can be impacted through the granting of a preliminary injunction, against the scenario in which public interest is impacted if the preliminary injunction is denied.

Patent Infringement Damages

In accordance with the US Code – Title 35, Section 284, patent infringement damages are granted.

There are numerous case precedents on which patent infringement damages experts can typically base their calculations upon. Those cases include, though are not limited to the following:

  • Georgia-Pacific vs United States Plywood
  • Panduit vs Stahlin Bros. Fibre Works

In basic terms, the remedy which is available to the plaintiff patent owner is to award the total amount of profit on sales that would have been generated by the patent owner if it were not for the infringement. Under and with respect to the Panduit case, the successful plaintiff needs to prove:

  • The patented product or technology had economic demand
  • Acceptable non-infringing substitutes were in absence
  • The exploitation of such demand would have been within the patent owner’s capabilities
  • And, the amount of profit that in all likelihood would have been generated

Reasonable Royalty

When damages in the form of a loss of potential profits cannot be proven, patent infringement damages are frequently calculated through an application of reasonable royalty. At minimum, the patent owner is entitled to receive a reasonable royalty payment given the infringement, according to Section 284.

Typically, reasonable royalty calculations are performed in conjunction with all 15 factors, which have been set forth in the case of Georgia-Pacific.

Given a scenario whereby the plaintiff competes in the marketplace but, nevertheless, would not have been able to realistically capture all infringing sales, calculation of patent infringement damages are made through a hybrid approach, which features a lost profits analysis together with a reasonable royalty analysis.