Overview

When a patent is valid and infringed, a patentee is entitled to damages adequate to compensate for the infringement. The reasonable royalty is one form of damages that is always available.

The statute created the recovery of a reasonable royalty for the very purpose of affording fair compensation in cases such as this, where the victimized patentee is unable to prove that he lost a measurable amount of profits as the result of the infringement.

— Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1127 (S.D.N.Y., 1970).

In all cases, when a patent is both valid and infringed, the reasonable royalty forms a floor for damages.

Section 284 further instructs that a damage award shall be in no event less than a reasonable royalty; the purpose of this alternative is not to direct the form of compensation, but to set a floor below which damage awards may not fall.

— Rite-Hite Corp. v. Kelley Co., Inc., 56 F. 3d 1538, 1544 (Fed. Cir. 1995).

The reasonable royalty reflects the value of something that was taken from the patentee.

As a substantive matter, it is the value of what was taken that measures a reasonable royalty.

— Ericsson, Inc. v. D-Link Systems, Inc., 773 F. 3d 1201, 1226 (Fed. Cir. 2014).

Namely, it compensates the patentee for lost licensing revenue that an infringer would have paid if infringement was not an option.

The reasonable royalty theory of damages … seeks to compensate the patentee not for lost sales caused by the infringement, but for its lost opportunity to obtain a reasonable royalty that the infringer would have been willing to pay if it had been barred from infringing.

— AstraZeneca AB v. Apotex Corp., 782 F. 3d 1324, 1334 (Fed. Cir. 2015).

A reasonable royalty is the same regardless of whether an infringer is guilty of direct infringement or induced infringement.

a direct infringer or someone who induced infringement should pay the same reasonable royalty based on a single hypothetical negotiation analysis.

— LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F. 3d 51, 76 (Fed. Cir. 2012).