Are damage awards in patent cases too large or too unpredictable? Although those issues generate a good deal of heated debate, there is little hard data. Critics of patent litigation — who point to studies showing that the typical jury verdict is many times the average amount awarded in bench trials — have argued that the Patent Act should be amended to make the rules governing damages more explicit and restrictive and to direct federal judges to take a more active role in monitoring damage theories presented to juries. A particular target of critics is the “entire market value rule,” which, in some circumstances, permits a patent holder to recover damages based on the value of an entire product including a patented invention, even if the patented feature is only a small part of the product as a whole.

Echoes of this debate can be heard in the U.S. Court of Appeals for the Federal Circuit’s recent decision in Lucent Tech. Inc. v. Gateway Inc., 580 F.3d 1301 (Fed. Cir. 2009), in which the court vacated a $357 million damage award against Microsoft Corp., remanding for a new trial on damages. Lucent owns a patent covering a method of entering information into fields on a computer screen without the need for a keyboard — for example, by using predefined tools such as an on-screen graphical keyboard, a menu or a calculator. Lucent claimed that Microsoft Outlook, Microsoft Money and Windows Mobile infringed the patent.

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