Rules For Damage Calculation

in Patent Infringement

In United States

Ravi Teja Chittipotu (I6099735)

The United States

of America

35 U.S.C 284

Damage awarded must be "adequate to

compensate for the infringement, but in no

event less than a reasonable royalty for

the use made of the invention by the

infringer, together with interest and costs

as fixed by the court."

I. Lost Profits

Lost profits are awarded only if the patentee can show causation in fact, establishing that ‘but for’ the infringement, the patentee would have made additional profits. A. "But For" Causation and the Panduit

Test

B. Compensable Losses

A. "But For" Causation and the Panduit Test:

(Panduit Corp. v. Stahlin Bros. Fibre Works,

575 F.2d 1152, 1156 (6th Cir.1978)).

To qualify, patentee need to establish:

(1) demand for the patented product;

(2) absence of acceptable non-infringing

substitutes;

(3) manufacturing and marketing capability to

exploit the demand;

(4) the amount of the profit the patentee would

have made.

B. Compensable Losses

After a determination is made that the patentee is

entitled to an award of lost profits, the court must

determine the amount of lost profits to which the

patentee is entitled.

1. Patented Product

2. Unpatented Products

3. Unpatented Components and the Entire

Market Value Rule

4. Price Erosion

5. Future Lost Profits

6. Lost Profits for Pre-infringement Conduct

II. Reasonable Royalty

If the patentee cannot establish "but for"

causation for an award of lost profits, he is

entitled to a reasonable royalty award.

A reasonable royalty is the amount that a

hypothetical licensee would be willing to pay the

patentee for a license to make, use, or sell the

patented product while still earning a reasonable

profit on that product.

- Georgia-Pacific Corp. v. United States Plywood

Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970)

III. Limitations on Damages

The patent statute imposes only two limitations on

the patentee's entitlement to damages.

A. The Six Year Limitation

B. The Notice Limitation

A. The Six Year Limitation

Section 286 Paragraph 1 provides that "no

recovery shall be had for any infringement

committed more than six years prior to the

filing of the complaint or counterclaim for

infringement in the action."

This limits the period during which damages

may be recovered.

B. The Notice Limitation

1. Actual notice

2. Constructive notice

IV. Willfulness and Enhancement of Damages

-35 U.S.C. 284 Paragraph 2 provides that the

court may increase the damages up to three

times the amount found or assessed.

-the infringement must be found, by clear and

convincing evidence, to be willful.

- Corp. v. Portec, Inc., 970 F.2d 816, 826, 23

U.S.P.Q.2d 1426, 1435 (Fed. Cir. 1992)

V. Other Awards

A. Attorney Fees

- Section 285 allows in cases involving willful

infringement, inequitable conduct before the

USPTO, misconduct during litigation, and

vexatious or unjustified litigation or frivolous suit.

- Beckman Instruments, Inc. v. LKB Produkter

AB

B. Pre- Judgment Interest

- In 1983, the United States Supreme Court

construed that "prejudgment interest should be

awarded under section 284 incase of absence of

justification for withholding such an award.

- award of prejudgment interest is necessary to

ensure that the patent owner is placed in as good

a position as he would have been had the

infringer not infringed.

C. Costs

Rule 54(d)(1) of the Federal Rules of Civil

Procedure

(1) clerk and marshal fees;

(2) court reporter fees;

(3) printing and witness fees;

(4) copying fees;

(5) docket fees; and

(6) compensation for court-appointed experts,

interpreters, and special interpretation services.

Conclusion

In U.S, the purpose of the damage can be

compensative as well as punitive, in case of

willful infringements.

The patentees can choose to prove his lost profits

or other compensatory loss or apply for the

reasonable royalty.

However if patentee cannot prove the lost profits,

the court can calculate the damages through the

latter approach.

THANK YOU