BASIC ECONOMIC AND LEGAL ASPECTS OF PATENT DAMAGE CALCULATIONS
DOI:
https://doi.org/10.32689/2617-9660-2020-3(9)-108-124Keywords:
patent, damages, lost profits, Intellectual Property.Abstract
In the leading international practice, courts are imposing astronomically inflated awards that overcompensate companies for the infringement or deceptive practices. Patent products are becoming more complex. Multiple patent technologies are applied. The problem of calculating and sharing the damage to intellectual property will remain of interest. Damage awards seek to compensate plaintiffs for only the specific value of a patented (falsely advertised) feature of a product that is otherwise made up of many other features. For example, if a litigant infringes on the patented spell check of text editor, damages are awarded only for the value of spell check, not the full value of text editor. Measuring this specific value, however, is a difficult task. As such, forensic experts are often called into court to assist a jury or a judge in the process of valuing these features. These experts employ sophisticated empirical methodologies to come up with their valuations. The problem is the method is consistently being misapplied. The United States has historically occupied centre stage in international patent litigation activity. One major reason for this is the fact that the United States is home to the majority of patents in force [1]. The United States is also an obvious location for litigation when a client seeks to maximise litigation damages. From 2012 to 2016 the median damages award in cases that went to trial was $8.9 million – far greater than the median damages award in China of less than $5,000, but less than the recent maximum. Moreover, in the United States, a court can award triple damages if there is wilful infringement, in addition to attorney fees. By contrast, punitive damages are not available in Germany or China. October 29, 2019 the District of Delaware ruled in Evolved Wireless, LLC v. Apple Inc., No. 15-00542 (“Evolved Wireless”) on the use of future sales in calculating lumpsum damages. In an order denying a motion to exclude a damages expert, the court wrote that the damages model in question, which used a lump sum payment structure, was not inadmissable simply because it accounted for future sales of potentially non-accused products. The court determined that any flaws in the expert’s methodology go to the weight and credibility of the witness’ testimony-not admissibility.
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