Patent damages need an overhaul
High patent damages demands and awards for complex products covered by thousands of patents are common in the United States and rare elsewhere in the world. The prospect of high damages awards is incentivizing unwarranted and abusive patent litigation in some industry sectors. Lack of clarity about appropriate evidence of...
November 30, 2015 at 07:00 PM
2 minute read
High patent damages demands and awards for complex products covered by thousands of patents are common in the United States and rare elsewhere in the world. The prospect of high damages awards is incentivizing unwarranted and abusive patent litigation in some industry sectors. Lack of clarity about appropriate evidence of and methodologies for setting a reasonable royalty for the infringed patent permits unreasonable claims. Courts' failure to rein in these claims is encouraging more of them.
In nearly every U.S. patent case involving high-tech products, there is a wide and irreconcilable gap between the damages figures presented by plaintiffs and defendants. Juries are confronted with competing experts and given a range of damages figures separated by tens and even hundreds of millions of dollars.
Entirely different valuation models are used and different data is relied upon to formulate valuations. Plaintiffs typically argue for per-unit running royalties on the largest possible royalty base. Defendants argue for lump sums tethered to comparable licenses and governed by the costs of non-infringing alternatives. Juries are left with the impossible task of deciphering the correct measure of damages.
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