Remedies
Monetary Damages
35 U.S. Code §284 sets forth remedies for patent infringement that include the recovery of monetary damages.
[U]pon 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.
— 35 U.S. Code §284.
Damages do not reflect uncertainty regarding validity or infringement of a patent because damages are awarded upon finding for the claimant. Damages should reflect the value of what was taken from the patent owner.
As the exclusive right conferred by the patent was property and the infringement was a tortious taking of a part of that property, the normal measure of damages was the value of what was taken.
— Dowagiac Mfg. Co. v. Minnesota Moline Plow Co., 235 US 641, 648 (S. Ct. 1915).
The value of what was taken reflects the patent owner’s point of view, rather than that of the infringer, the customer, or the government.
[Damages] have been defined by this Court as compensation for the pecuniary loss he [the patentee] has suffered from the infringement, without regard to the question whether the defendant has gained or lost by his unlawful acts.
— Aro Mfg. Co. v. Convertible Top Replacement Co., 377 US 476, 507 (S. Ct. 1964).
That value reflects the difference in pecuniary condition of the patent owner in two states of the world: one with infringement and one without.
They have been said to constitute the difference between his pecuniary condition after the infringement, and what his condition would have been if the infringement had not occurred.
— Aro Mfg. Co. v. Convertible Top Replacement Co., 377 US 476, 507 (S. Ct. 1964).
The state of the world with infringement can often be observed in the record because it actually happened. The state of the world without infringement is hypothetical and depends on the facts and circumstances of a case.
In a lost profits analysis we typically imagine a hypothetical in which the infringer does not take a license and is enjoined from conducting the infringing activity. In a reasonable royalty analysis we typically imagine a hypothetical world in which the infringer licenses the patent and then operates as a licensor.
Scope of Damages
A patent owner has the right to be compensated for any damages that can be proved.
To expedite the legal process, Congress amended the statute to provide for "any damages the complainant can prove." Id.[3] Later, the Patent Act of 1952 consolidated the existing provisions relating to damages into section 284. The 1952 Act effected no substantive change other than the addition of an attorney fees clause.
— King Instruments Corp. v. Perego, 65 F. 3d 941, 947 (Fed. Cir. 1995).
Damages should fully compensate the patent owner.
[W]hile the statutory text states tersely that the patentee receive adequate damages, the Supreme Court has interpreted this to mean that adequate damages should approximate those damages that will fully compensate the patentee for infringement. Further, the Court has cautioned against imposing limitations on patent infringement damages[.]
— Rite-Hite Corp. v. Kelley Co., Inc., 56 F. 3d 1538, 1545 (Fed. Cir. 1995).
The statute defines damages broadly.
Section 284 imposes no limitation on the types of harm resulting from infringement that the statute will redress. The section's broad language awards damages for any injury as long as it resulted from the infringement.
— King Instruments Corp. v. Perego, 65 F. 3d 941, 947 (Fed. Cir. 1995).
There are limits to what the courts will accept as damage caused by infringement. For example, a patentee may be unable to recover damages that were not be reasonably, objectively foreseeable.
We believe that under § 284 of the patent statute, the balance between full compensation, which is the meaning that the Supreme Court has attributed to the statute, and the reasonable limits of liability encompassed by general principles of law can best be viewed in terms of reasonable, objective foreseeability. 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 Corp. v. Kelley Co., Inc., 56 F. 3d 1538, 1546 (Fed. Cir. 1995).
The Federal Circuit provided examples of non-recoverable damages in Rite-Hite Corp. v. Kelley Co., Inc., 56 F. 3d 1538.
Notwithstanding the broad language of § 284, judicial relief cannot redress every conceivable harm that can be traced to an alleged wrongdoing. See Associated General Contractors, Inc. v. California State Council of Carpenters, 459 U.S. 519, 536, 103 S.Ct. 897, 907-08, 74 L.Ed.2d 723 (1983). For example, remote consequences, such as a heart attack of the inventor or loss in value of shares of common stock of a patentee corporation caused indirectly by infringement are not compensable.
— Rite-Hite Corp. v. Kelley Co., Inc., 56 F. 3d 1538, 1546 (Fed. Cir. 1995).
There are special rules that govern the United States government’s use of patents.
[A] patentee can recover damages only from the government for patented use or manufacture for the United States. 28 U.S.C. § 1498(a). Nevertheless, this error does not require a new trial. The district court instructed the jury that sales to the United States government should not be included in any damages calculation you perform.
— Finjan, Inc. v. Secure Computing Corp., 626 F. 3d 1197, 1208 (Fed. Cir. 2010).
Measures of Damages
The two most popular measures of damages are the reasonable royalty and lost profits. A reasonable royalty is a floor below which damages must not fall.
[A] jury is entitled to award compensatory damages in addition to a reasonable royalty because a reasonable royalty is merely the floor below which damages shall not fall. Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1583 (Fed.Cir.1983). Patentees bear the burden of proving such damages, however.
— Whitserve, LLC v. Computer Packages, Inc., 694 F. 3d 10, 33 (Fed. Cir. 2012).
Lost profits reflect profits the patent owner lost in the marketplace due to infringement.
The most obvious form of injury from such a violation, as mentioned above, is profits lost to the infringer in the market for the product. The patentee's sale of a competing product not covered by the patent within that market does not change the policy justifications for restoring the parties to the positions they would have occupied absent the infringement.
— King Instruments Corp. v. Perego, 65 F. 3d 941, 949 (Fed. Cir. 1995).
The patent owner is entitled to compensation on every unit. Thus, the portion of infringing sales not included in a lost profits calculation may be subject to compensation in the form of a reasonable royalty.
The Patent Act permits damages awards to encompass both lost profits and a reasonable royalty on that portion of an infringer's sales not included in the lost profit calculation.
— Minco, Inc. v. Combustion Engineering, Inc., 95 F. 3d 1109, 1119 (Fed. Cir. 1996).
There may be forms of damage that are recoverable and yet are distinct from both a reasonable royalty and lost profits.
We have previously recognized that patentees may be entitled to damages above a reasonable royalty on theories entirely distinct from lost profits. See, e.g., Minco, 95 F.3d at 1120 (recognizing that the patentee might have been entitled to damages as a result of overpaying for the infringer's business, if it had proven that the infringing products were an important factor in the sale).
— Mars, Inc. v. Coin Acceptors, Inc., 527 F. 3d 1359 (Fed. Cir. June 2, 2008).
One such case was brought before the Court of Appeals for the Federal Circuit in 1996.
In this case, the jury instruction tracked the requirements for a traditional reasonable royalty analysis. However, the special verdicts asked the jury to answer two separate inquiries, the amount of a reasonable royalty and the additional damages required to compensate for infringement. The first inquiry required the jury to determine the royalty that two willing parties would negotiate; the second inquiry required the jury to determine the increase in the damages required to adequately compensate the patentee based on other relevant factors. In sum, the district court did not abuse its discretion.
— Maxwell v. J. Baker, Inc., 86 F. 3d 1098, 1110 (Fed. Cir. 1996).
Damages Period
Damages may be recovered up to six years prior to the filing of a complaint. Thus, the damages period does not necessarily extend back to the date of first infringement.
Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action. In the case of claims against the United States Government for use of a patented invention, the period before bringing suit, up to six years, between the date of receipt of a written claim for compensation by the department or agency of the Government having authority to settle such claim, and the date of mailing by the Government of a notice to the claimant that his claim has been denied shall not be counted[.]
— 35 U.S. Code § 286.
Patentees who make, offer for sale, sell, or import patented articles either directly or through their agents must give notice to the public that those articles are patented. They can give notice either by marking those products with the patent number, or by marking products with an internet address that links to the patent number. Damages are not recoverable if such articles are not marked unless the infringer was notified of the infringement and continued to infringe anyway.
[Patentees] may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or by fixing thereon the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice.
— 35 U.S. Code § 287 (a).
When a patent owner satisfies the notice requirement by marking their products, marking must be ongoing and substantially continuous.
We have construed section 287(a) to require that once marking has begun, it must be substantially consistent and continuous in order for the party to avail itself of the constructive notice provisions of the statute.
— Maxwell v. J. Baker, Inc., 86 F. 3d 1098, 1111 (Fed. Cir. 1996).
The filing of a complaint may serve as notice.
In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.
— 35 U.S. Code § 287 (a).
When a patentee sells patented articles, damages can only be recovered after the notice date.
Section 287 of the Patent Act provides that patentees shall give notice of infringement by marking any patented article and that damages shall be limited to the time period subsequent to that notice. 35 U.S.C. § 287(a).
— State Contracting & Eng. v. Condotte America, 346 F. 3d 1057, 1073 (Fed. Cir. 2003).
The notice requirement does not apply for patents that are directed to a process or method.
It is settled in the case law that the notice requirement of this statute does not apply where the patent is directed to a process or method.
— State Contracting & Eng. v. Condotte America, 346 F. 3d 1057, 1073 (Fed. Cir. 2003).
This is true because with a method claim there is generally nothing to mark.
The reason that the marking statute does not apply to method claims is that, ordinarily, where the patent claims are directed to only a method or process there is nothing to mark. Where the patent contains both apparatus and method claims, however, to the extent that there is a tangible item to mark by which notice of the asserted method claims can be given, a party is obliged to do so
— American Medical Systems v. Medical Engineering Corp., 6 F. 3d 1523, 1538-39 (Fed. Cir. 1993).
A website may or may not count as an "article" that patentee must mark.
Whether a website counts as an "article" that a patentee must mark has been a topic of debate among the district courts, but courts considering the issue have determined that a patentee must mark a website either where the website is somehow intrinsic to the patented device or where the customer downloads patented software from the website
— Limelight Networks, Inc. v. XO Commc'ns, LLC, Civil Action No. 3:15-cv-720-JAG, at 9 (E.D. Va. Mar. 13, 2017)
When a patent survives reexamination the owner may be able to recover damages dating back to the date the original patent issued.
A patentee of a patent that survives reexamination is only entitled to infringement damages for the time period between the date of issuance of the original claims and the date of issuance of the reexamined claims if the original and the reexamined claims are "substantially identical.
— R+L Carriers, Inc. v. Qualcomm, Inc., 801 F. 3d 1346, 1349 (Fed. Cir. 2015).
When substantives changes are made to the original claims during reexamination, damages may not be recoverable prior to the date of reissue.
If, on the other hand, a substantive change has been made to the original claims during reexamination, the patentee is entitled to infringement damages only for the time period following issuance of the reexamination certificate.
— R+L Carriers, Inc. v. Qualcomm, Inc., 801 F. 3d 1346, 1349 (Fed. Cir. 2015).
Disgorgement of Profits
The holder of an infringed design patent may seek discouragement of profits.
Whoever [infringes] a patent for a design ... shall be liable to the owner to the extent of his total profit, but not less than $250[.] ... Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.
— 35 U.S. Code § 289.
The Supreme Court interprets “total profit” to mean the total profit on an article of manufacture, which may be an end product or a component of the end product that contains the patented design.
In the case of a multicomponent product, the relevant article of manufacture for arriving at a §289 damages award need not be the end product sold to the consumer but may be only a component of that product.
— Samsung Elec. v. Apple Inc., 580 U.S._(2016).
At the time of writing this book the Federal Circuit had yet to interpret the Supreme Court’s ruling. Historically, the Federal Circuit awarded total profit on the entire accused product at issue.
The Act of 1887, specific to design patents, removed the apportionment requirement. … Id. The provisions in the Act of 1887 on design patent infringement damages were subsequently codified in Section 289 of Title 35. Id. at 1440-43 (containing a detailed and thorough discussion of the legislative history that need not be repeated here).
— Apple Inc. v. Samsung Electronics Co., Ltd., 786 F. 3d 983, 1001 (Fed. Cir. 2015).
Fees and Interest
The court may award prejudgment interest on damages to the patentee where necessary to compensate the patentee.
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.
— 35 U.S. Code § 284.
Postjudgment interest is awarded following any money judgment in a civil trial.
Interest shall be allowed on any money judgment in a civil case recovered in a district court. Execution therefor may be levied by the marshal, in any case where, by the law of the State in which such court is held, execution may be levied for interest on judgments recovered in the courts of the State.
— 28 U.S. Code 1961 (a).
Postjudgment interest is calculated at a rate equal to the weekly average 1-year constant maturity Treasury yield.
Such interest shall be calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment.
— 28 U.S. Code 1961 (a)
Attorney fees may be awarded under exceptional circumstances.
Our analysis begins and ends with the text of § 285: The court in exceptional cases may award reasonable attorney fees to the prevailing party. This text is patently clear. It imposes one and only one constraint on district courts' discretion to award attorney's fees in patent litigation: The power is reserved for exceptional cases.
— Octane Fitness v. ICON Health & Fitness, 134 S. Ct. 1749, 1755-56 (S. Ct. 2014).
Equitable Relief
Three forms of equitable relief include enhanced damages, an ongoing royalty and an injunction. Enhanced damages may be awarded up to three times the amount of damages originally assessed.
When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d).
— 35 U.S. Code § 284.
A court may grant injunctions or an ongoing royalty in accordance with the principles of equity.
The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
— 35 U.S. Code § 283.
A patentee seeking permanent injunction must satisfy the following four factor test.
According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
— 35 U.S. Code § 283.
When a patentee cannot prove these four factors a court may order the infringer to pay an ongoing royalty.
Under some circumstances, awarding an ongoing royalty for patent infringement in lieu of an injunction may be appropriate.
— Paice llC v. Toyota Motor Corp., 504 F. 3d 1293, 1314 (Fed. Cir. 2007).
The award of an ongoing royalty does not automatically follow from the denial of a permanent injunction.
[A]warding an ongoing royalty where "necessary" to effectuate a remedy ... does not justify the provision of such relief as a matter of course whenever a permanent injunction is not imposed.
— Paice llC v. Toyota Motor Corp., 504 F. 3d 1293, 1314-15 (Fed. Cir. 2007).
In most cases, when the court awards an ongoing royalty, it will allow parties to negotiate the amount of the ongoing royalty.
In most cases, where the district court determines that a permanent injunction is not warranted, the district court may wish to allow the parties to negotiate a license amongst themselves regarding future use of a patented invention before imposing an ongoing royalty.
— Paice llC v. Toyota Motor Corp., 504 F. 3d 1293, 1315 (Fed. Cir. 2007).
If negotiations fail the court will generally calculate the amount of the ongoing royalty.
Should the parties fail to come to an agreement, the district court could step in to assess a reasonable royalty in light of the ongoing infringement.
— Paice llC v. Toyota Motor Corp., 504 F. 3d 1293, 1315 (Fed. Cir. 2007).