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Patent Infringement Damages
Infringement of a patent consists of the unauthorized making, using, offering for sale, or selling any patented invention within the United States or U.S. Territories. Infringement also includes importing into the United States any product that includes the patented invention during the term of the patent. If a patent is infringed, the patentee may sue for relief in the appropriate federal court.1
In the event that a defendant is found liable, the patent owner is entitled to request various remedies, including: lost profits, reasonable royalties, and prejudgment interest.
Title 35, section 284 of the U.S. Code states that "the court shall award the claimant damages adequate to compensate for the infringement."2 Often, this compensation includes "lost profits," which are profits on sales the patent owner would have made, absent the infringement. In many cases the lost profit analysis follows the four factors outlined in Panduit v. Stahlin Brothers. To obtain lost profit damages based on these factors, the patent owner must prove demand for the patented product, the absence of acceptable non-infringing substitutes, the capacity to exploit the demand, and the amount of profit the owner would have made.
When actual damages in the form of lost profits cannot be proved, compensation to the patent owner should be "in no event less than a reasonable royalty for the use made of the invention by the infringer."3 A reasonable royalty is often determined by considering the the fifteen factors described in Georgia-Pacific v. US Plywood.
In many cases, an award of prejudgment interest is necessary to ensure that the plaintiff is placed in the same position as he would have been in if the defendant had not infringed. Although interest calculations do not usually take prominence in a plaintiff's legal strategy, prejudgment interest can be quite sizable.
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