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.

Compounding the problem, damages claims are presented for patents-in-suit in a vacuum, without regard to other patents or intellectual property rights or public domain materials that might relate to the same royalty base. In fields where products are covered by patent thickets, royalty stacking can result in damages claims that far exceed the value of the product.

Patent damages law needs an overhaul, especially in the area of reasonable royalty damages. Courts need to exercise their gatekeeping authority to prevent excessive damages claims from reaching juries. Damages models that ignore or fail to reconcile real-world evidence should be discarded. Widely varying computations of damages should be viewed with skepticism and reconciled before they reach juries. Grounding damages in compensation based on the value of the patented technology, and excluding value not attributable to the patent, would curb the abusive, lottery ticket style patent litigation that is plaguing U.S. industry.