What a Patent Is Worth in Court: Reasonable Royalties, Lost Profits, and Apportionment
By Casey Scott McKay ·
A patent damages award answers a narrow question: what would the patentee have had if the infringement had not happened. The statute sets a floor of a reasonable royalty and permits lost profits where the patentee can prove them, and both routes are governed by an apportionment principle that has become the central battleground. This article explains the two damages theories and when each is available, how the hypothetical negotiation actually works, why the royalty base fights matter more than the rate fights, what the entire market value rule permits and forbids, and how comparable licenses are used and misused. It covers marking, notice, and the six-year limitation, which decide the length of the damages period before anyone argues about its size. It closes with willfulness, enhancement, fees, and injunctive relief.
IP and Technology > Patent Litigation | Article | Published 12 January 2024 - Updated 29 October 2024 | Casey Scott McKay - marksy.us
Summary. A patent damages award answers a narrow question: what would the patentee have had if the infringement had not happened. The statute sets a floor of a reasonable royalty and permits lost profits where the patentee can prove them, and both routes are governed by an apportionment principle that has become the central battleground. This article explains the two damages theories and when each is available, how the hypothetical negotiation actually works, why the royalty base fights matter more than the rate fights, what the entire market value rule permits and forbids, and how comparable licenses are used and misused. It covers marking, notice, and the six-year limitation, which decide the length of the damages period before anyone argues about its size. It closes with willfulness, enhancement, fees, and injunctive relief.
Keywords: patent damages, reasonable royalty, lost profits, apportionment, royalty base, royalty rate, entire market value rule, smallest salable patent-practicing unit, hypothetical negotiation, comparable licenses, Panduit factors, price erosion, convoyed sales, marking, actual notice, willfulness, enhanced damages, treble damages, attorney fees, permanent injunction
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