A utility patent owner with a provable case of infringement, and the
patience and wherewithal to successfully prosecute an infringement
action, must remember that he or she has four possible types of
damages available.
35 U.S.C. S 284 governs damages. While the law provides no maximum
damages, it does provide a minimum. Damages shall "in no event [be]
less than a reasonable royalty for the use made of the invention by
the infringer." Additionally, the court may increase the damages up to
three times the actual damages suffered. The four types of damages to
remember are as follows.
First, compensatory damages are designed to replace what the inventor
has lost. In the case of an inventor who does not have the capacity to
manufacture his or her own invention, compensatory damages set at a
reasonable royalty might be appropriate. A reasonable royalty would be
that amount, determined by the court, which a person desiring to
manufacture a patented device would be willing to pay. For an inventor
who actually makes the product that was infringed, expanded
possibilities exist. The inventor can recover lost profits due to the
infringement measured by either the owner's profit margin or that of
the infringer. The owner must prove a reasonable probability of having
made the sales but for the infringement, but does not have to prove
that prospective purchasers certainly would not have bought a
competing or alternate product.
Second, while indirect damages are generally not recoverable, the
"entire market value" rule allows a patent owner to collect damages
based on the value of an entire infringing device, even if that device
contains multiple features and only one of the features infringes.
Third, a patent owner can collect both prejudgment and postjudgment
interest on an infringement award.
Fourth, and very importantly, a patent owner may recover punitive
damages. 35 U.S.C. S 284 allows a court to award up to triple damages
if the infringer has knowingly, deliberately, intentionally,
willfully, or wantonly infringed the patent. According to the U.S.
Supreme Court, three factors guide a decision to award enhanced
damages; (1) whether the infringement was willful or deliberate; (2)
whether the infringer had a good faith belief that the patent was
invalid; and (3) the party's conduct during the litigation.
Determinations of willfulness are difficult and must be made on a
highly individual basis that are beyond the scope of this discussion.
While not strictly a form of damages, 35 U.S.C. S 285 provides for the
recovery of attorney fees in "exceptional cases." More on that item in
a later article.
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