CBA Record

Y O U N G L A W Y E R S J O U R N A L

Understanding Patent Damages: The Basics By Lindsey G. Fisher and Kevin T. McElroy

A vailable remedies for intellectual property owners vary by intellec- tual property type. Monetary relief for patent damages generally falls into two categories: actual damages and reasonable royalty damages. Section 284 of Title 35 provides guidance to practitioners when calculating patent damages: “Upon finding for the claimant the court shall award the claimant dam- ages 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

that it would have made additional sales “but for” a defendant’s infringement. State Industries v. Mor-Flo Industries, Inc. , 883 F.2d 1573, 1577 (Fed. Cir. 1989). The Court of Appeals for the Sixth Circuit set forth a four-pronged test to determine if a patentee can receive lost profits ( Panduit Corp. v. Stahlin Bros. FiberWorks, Inc. , 575 F.2d 1152 (6th Cir. 1978)), which is often referred to as the Panduit Factors. The four Panduit Factors are: • Demand for the patented product or service; • Absence of acceptable noninfringing substitutes; • Manufacturing and marketing capabil-

and costs as fixed by the court.” 35 U.S.C. § 284. Section 284 suggests that a “reasonable royalty” calculation exists as a floor to damages. The most common calculation of actual damages takes the form of lost prof- its. Lost profits may be an available remedy to a patent holder who demonstrates that it would have made additional sales in the absence of infringement, whereas reasonable royalty damages are available to everyone. Lost Profit Damages In order to recover lost profits damages, the patent holder needs to demonstrate

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