Post-Judgment (“Ongoing”) Royalties

  • BASICS: “There are several types of relief for ongoing infringement that a court can consider: (1) it can grant an injunction; (2) it can order the parties to attempt to negotiate terms for future use of the invention; (3) it can grant an ongoing royalty; or (4) it can exercise its discretion to conclude that no forward-looking relief is appropriate in the circumstances.” Whitserve (Fed. Cir. 08/07/12). “Ongoing royalties may be based on a post-judgment hypothetical negotiation using the Georgia-Pacific factors.” Arctic Cat (Fed. Cir. 12/07/17) (aff’g ongoing royalty of twice the royalty awarded by the jury).
  • Jury’s Award Of Paid-Up Royalty Bars Award Of Ongoing Royalty: Where defendant sought lump-sum royalty and jury wrote “lump sum” on verdict form, district court has discretion to treat damages as award through life of the patent and deny ongoing royalties. Summit 6 (Fed. Cir. 09/21/15); see Prism Tech. (Fed. Cir. 03/06/17) (aff’g refusal to award ongoing royalties where reasonable to find that jury award of $30 MM was based on a paid-up license fee and included future infringements).
  • Jury’s Royalty Award Does Not Cap Post-Injunction Damages During Stay Of An Injunction (“Sunset Royalty”): Post-injunction damages award “should take into account the change in the parties’ bargaining positions, and the resulting change in economic circumstances, resulting from the determination of liability—for example, the infringer’s likelihood of success on appeal, the infringer’s ability to immediately comply with the injunction, the parties’ reasonable expectations if the stay was entered by consent or stipulation, etc.—as well as the evidence and arguments found material to the granting of the injunction and the stay.” Amado (Fed. Cir. 02/26/08); XY (Fed. Cir. 05/23/18) (2-1) (remanding ongoing royalty award as district court cited no economic factors justifying ongoing royalty being lower than royalty rate awarded by jury); see ActiveVideo (Fed. Cir. 08/24/12) (aff’g “sunset royalty” during stay of injunction, of 60% of infringer’s incremental profit per subscriber per month).
  • Jury’s Royalty Award Does Not Cap Post-Judgment “Ongoing Royalty” (Where No Injunction Granted): Bard Peripheral I (Fed. Cir. 02/10/12) (jury awarded 10% reasonable royalty; court awarded ongoing royalty of 12.5% to 20%, depending on product); ActiveVideo (Fed. Cir. 08/24/12) (analysis similar but not identical to “sunset royalty” analysis). No right to jury trial on this equitable remedy. Paice (Fed. Cir. 10/18/07).
  • Ongoing Royalty May Exceed Infringer’s Profits: Requiring infringer to raise its price “may be the only way to adequately compensate the patentee for the use of its technology.” Douglas Dynamics (Fed. Cir. 05/21/13).
  • Court Should Award Post-Judgment Damages Up To Entry Of The Injunction: Trial court must award damages (as an accounting) for post-judgment infringements up to entry of an injunction. Finjan (Fed. Cir. 11/04/10); Power Integrations (Fed. Cir. 03/26/13) (right to post-verdict accounting not waived).
  • Patent Owner Entitled To Post-Verdict Royalty For Repair Parts: “A damages award for pre-verdict sales of the infringing product does not fully compensate the patentee because it fails to account for post-verdict sales of repair parts. … The district court was within its discretion to impose a royalty on those sales of disposable products in order to fully compensate Baxter for the infringement.” Fresenius (Fed. Cir. 09/10/09).