If patent infringement can be proven, the damages that can flow to the wronged party are varied and nuanced. Given the high stakes in patent litigation, both in the amounts spent by the parties in litigating the action and the investment of the original party in developing the patent, it’s not surprising that the damages available in these lawsuits may be considerable.
- Profits Lost: One commonly sought form of damages is lost profits. Since a patent infringement claim is typically predicated on the defendant’s sale of a product that is covered by one or more claims of the plaintiff’s patent(s), the law expects that the defendant will pay back those profits to the extent that the defendant profited from such sales. The onus is on the plaintiff to prove that were it not for the actions of the defendant, the plaintiff’s sales would have been higher. Therefore, while the concept of awarding lost profits sounds reasonable, the reality of proving them is more complicated. The logistics of calculating lost profits is a confusing and complicated challenge, and often the subject of considerable dispute.
- Reasonable license fee: While calculating and proving lost profits may be a high hurdle to clear for some plaintiffs, U.S. patent law does allow them to recover from the defendant the equivalent of a “reasonable royalty”. A reasonable royalty is what the defendant would have paid to the plaintiff to use the patented technology had they entered into a licensing relationship prior to the infringement occurring. The challenge here becomes how to determine the hypothetical fee the defendant would have paid to the plaintiff had the parties negotiated with each other in good faith and at arm’s length.
- Damages that are enhanced: In situations where the conduct of the defendant infringer is particularly egregious, the court has discretion to award enhanced damages. The purpose of enhanced damages is to penalize the conduct of the defendant. Defendants trigger enhanced damages with wilful conduct, such as continuing to infringe after being made aware of it. Enhanced damages are not only punitive to the defendant, but they also send a warning to others who may be considering infringing upon patents for their own gain.
- Non-monetary relief: One of the most important and useful types of damages that a plaintiff can obtain is injunctive relief. Injunctive relief is a court order telling the defendant to do certain things, such as stopping the manufacture or sale of an infringing product. Injunctive relief is an important tool, particularly at the beginning of an infringement action, because it helps ensure that the infringement does not continue during the lengthy period of time it takes to litigate an infringement action. The burden of proof to obtain injunctive relief varies depending upon the level of relief requested. An emergency, temporary injunction will not require as much as a permanent injunction. Either way, however, injunctions act much like tourniquets in early litigation and help to prevent further infringement from occurring while the plaintiff assess the damage.
The issues relating to patent infringement damages are complex, and require competent and experienced counsel. If our law firm can be of assistance with any of your patent needs, please don’t hesitate to contact us.
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