Damages and Other Monetary Remedies – Basics

  • BASICS: “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. … the court may increase the damages up to three times the amount found or assessed….” 35 U.S.C. § 284. “‘Damages adequate to compensate’ means ‘full compensation for any ‘any damages’ [the patent owner] suffered as a result of the infringement.’ [i.e.] the statutory measure of damages is ‘the difference between [the patent owner’s] pecuniary condition after the infringement, and what his condition would have been if the infringement had not occurred.’” Mentor Graphics (Fed. Cir. 03/16/17) (aff’g award of $36.4 MM in lost profits on lost sales), rehearing denied (Fed. Cir. 09/01/17) (10-2) (two opinions on damages). “The ‘but for’ damages the patentee must establish in patent law … are an answer to a simply stated question: ‘[H]ad the Infringer not infringed, what would the Patent Holder-Licensee have made?’” Id. “The remedy of damages seeks to compensate the victim for its loss, whereas the remedy of an accounting, which Congress abolished in the patent context in 1946, sought disgorgement of ill-gotten profits.” SCA Hygiene III (U.S. 03/21/2017) (7-1). An “accounting” within the meaning of 28 U.S.C. § 1292(c)(2) (allowing appeal from judgment that is final except for an accounting) may include a trial on damages (and a determination of willfulness). Robert Bosch (Fed. Cir. 06/14/13) (en banc).
  • Patentee Entitled To “Full Compensation” For “Any Damages” Suffered As A Result Of The Infringement, With “Damages” Restricted By “Proximate Cause” Principles: “Congress sought to ensure that the patent owner would in fact receive full compensation for ‘any damages’ he suffered as a result of the infringement. Accordingly, Congress expressly provided in § 284 that the court ‘shall award the claimant damages adequate to compensate for the infringement.’” General Motors (U.S. 05/24/1983); Aro Mfg. (Aro II) (U.S. 06/08/1964) (“we must ask how much CTR suffered by Aro’s infringement—how much it would have made if Aro had not infringed.”) “Under §284, damages are ‘adequate’ to compensate for infringement when they ‘plac[e] [the patent owner] in as good a position as he would have been in’ if the patent had not been infringed. Specifically, a patent owner is entitled to recover ‘the difference between [its] pecuniary condition after the infringement, and what [its] condition would have been if the infringement had not occurred.’” WesternGeco III (U.S. 06/22/2018) (7-2) (expressly not addressing proximate cause). But balancing this “full compensation” principle with principles of “proximate cause” that limit compensable damages for patent infringement, means that injuries which were not “reasonably foreseeable” cannot be compensated: “if a particular injury was or should have been reasonably foreseeable by an infringing competitor in the relevant market, broadly defined, that injury is generally compensable absent a persuasive reason to the contrary.” Rite-Hite (Fed. Cir. 06/15/95) (en banc) (8-4 on this section). “The term ‘damages’ in the patent statute must be interpreted in light of the familiar common law principles of legal or proximate cause associated generally with that term.” Rite-Hite (Fed. Cir. 06/15/95) (en banc) (4 judge dissenting op.) (“the lack of proximate causation will preclude recovery for certain losses even though a ‘but-for’ standard of injury in fact is satisfied.”) See Power Integrations (Fed. Cir. 03/26/13) (“the entirely extraterritorial production, use, or sale of an invention patented in the United States is an independent, intervening act that, under almost all circumstances, cuts off the chain of causation initiated by an act of domestic infringement,” even if the damages were foreseeable).
  • Sec. 284 Expansive; Permits Various Types of Damages: statutory language is expansive; damages are not limited to lost profits, established royalty and reasonable royalty. Mars (Fed. Cir. 06/02/08).
  • A Patentee May Recover Mixed Damages: A patentee can sometimes get a mixed award of lost profits for some infringing activities and reasonable royalty for other infringing activities. Siemens Med. (Fed. Cir. 02/24/11) (remanding for trial court to determine reasonable royalty for units where lost profits were not proven).
  • Patentee Has Burden of Proof: For reasonable royalty, a patentee has the burden to prove the amount of damage. Dow Chem. (Fed. Cir. 09/05/03); Info-Hold (Fed. Cir. 04/24/15). For lost profits, a patentee has the burden to prove both the fact of damage and the amount. Rite-Hite (Fed. Cir. 06/15/95) (en banc).
  • Damages For Multiple Types Of Liability Limited When Based On Sale Of Same Goods: Tex. Advanced (Fed. Cir. 05/01/18) (vacating monetary award for patent infringement; awarding damages for both trade secret misappropriation and patent infringement (based on same feature) was improperly duplicative to the extent based on same defendant sales of same products).
  • TIPS: