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The Law Firm ofLouis Ventre, Jr.Registered Patent Attorney INFRINGEMENT DAMAGES |
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"Upon finding for the
claimant the court shall award the claimant damages 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."
"[T]he present statutory rule is that only 'damages' may be recovered. These have been defined by this Court as 'compensation for the pecuniary loss he [the patentee] has suffered from the infringement ....' They have been said to constitute "the difference between his pecuniary condition after the infringement, and what his condition would have been if the infringement had not occurred." Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 507 [141 USPQ 681] (1964) (citations omitted).
"But the present statutory rule is that only 'damages' may be recovered. These have been defined by this Court as 'compensation for the pecuniary loss he [the patentee] has suffered from the infringement, without regard to the question whether the defendant has gained or lost by his unlawful acts." Aro at 506 (citations omitted). However, the district court's use of an infringer's profit margin for comparison purposes in determining the reasonableness of a patent owner's estimate of lost profits did not constitute an abuse of discretion. Kori Corp. v. Wilco Marsh Buggies and Draglines, Inc., 761 F.2d 649 (Fed.Cir.1985). .
"The general rule for determining the actual damages to a patentee that is itself producing the patented item, is to determine the sales and profits lost to the patentee because of the infringement. Although the statute states that the damage award shall not be 'less than a reasonable royalty,' 35 U.S.C. § 284, the purpose of this alternative is not to provide a simple accounting method, but to set a floor below which the courts are not authorized to go." (citation omitted). The Court of Appeals for the Federal Circuit recently stated that the royalty base used to calculate a reasonable royalty should be the "smallest salable patent-practicing unit." Further, the entire market value of a product may only be used when the "the demand for the entire product is attributable to the patented feature." "Where small elements of multi-component products are accused of infringement, calculating a royalty on the entire product carries a considerable risk that the patentee will be improperly compensated for non-infringing components of that product. Thus, it is generally required that royalties be based not on the entire product, but instead on the "smallest salable patent-practicing unit. . . . [t]he entire market value rule allows for the recovery of damages based on the value of an entire apparatus containing several features, when the feature patented constitutes the basis for customer demand." Citations omitted. Laserdynamics v. Quanta Computer, Slip Opinion, pp 22-23, (Fed. Cir. 2012), case 2011-1440, -1470, decided 30-AUG-2012. In Finjan, Inc. v. Blue Coat Systems, Inc., Case No. 16-2520 (Fed. Cir., Jan. 10, 2018), the US Court of Appeals for the Federal Circuit clarified that proper apportionment requires both establishing a royalty base from the “smallest, identifiable technical component” and basing the award "on the incremental value that the patented invention adds to the end product.” Citation omitted. Even when the component "is essential" for use of an infringing product, it can be very difficult to collect a royalty on the entire value of that infringing product. This was made frustratingly clear to the patent holder in the Laserdynamics decision, where the Federal Circuit also held-- "It is not enough to merely show that the disc discrimination method is viewed as valuable, important, or even essential to the use of the laptop computer. Nor is it enough to show that a laptop computer without an ODD practicing the disc discrimination method would be commercially unviable. Were this sufficient, a plethora of features of a laptop computer could be deemed to drive demand for the entire product . . . . [P]roof that consumers would not want a laptop computer without such features is not tantamount to proof that any one of those features alone drives the market for laptop computers." Emphasis added. Laserdynamics at pp 25, 26.
Similarly, attorney fees may also be awarded in "exceptional" cases pursuant to section 285 of title 35 of the United States Code. Attorney fees are most often awarded when the degree of culpability of an infringer is very clear from the start or if it was obvious the defendant wasn't an infringer from the start, or where litigation behavior on the part of a party stretches the rules. However, exceptional circumstances often require a finding of gross unfairness, or bad faith on the part of a party. If the patent owner loses the suit because of inequitable conduct in acquiring the patent, the patentee could be liable for attorney fees and lose his patent. Inequitable conduct involves lying to the Patent Office or concealing prior art, or not telling the Patent Office of some event that would have precluded issuance of the patent. In most cases, proving exceptional circumstances is difficult and a very high hurdle. So, attorney fees are not usually awarded. When interpreting § 285, the Supreme Court in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U. S. ___, ___.and Highmark Inc. v. Allcare Health Management System, Inc.,, 572 _, noted that there is no statutory support for a restrictive test that takes discretion away from the district court with respect to determining when to award attorneys’ fees to a prevailing part in patent infringement litigation.
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This file last modified 05/19/20. |