Patent Infringement: Compensation and Damages

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Bryan W. Butler

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“A methodical seven-step approach to the estimation of patent compensation and damages.”
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When a patent has been infringed, there's usually a price to pay, whether it's the result of a trial verdict or a negotiated settlement. Even when compensation for patent infringement is a certainty,determining the right amount is a complex matter involving the interplay of many legal and financial variables.

Patent Infringement: Compensation and Damages

is a complete, concise and detailed guide. It explains each step, from a finding of infringement to a determination of damages. The process starts with determining the damages period and damages base, from both a product and a geographic perspective. Next, the appropriate theory—reasonable royalty or lost profits—is applied. Then enhancements or limitations are considered, as well as the likelihood and effect of an injunction.

The book shows you the methods used, the possible variations, the unique patent law doctrines that may apply, and the strategies to consider in seeking terms most advantageous to your client. The book also examines how awards of damages are treated under accounting rules and discusses the admissibility of evidence from expert witnesses respecting damages.
Patent Infringement: Compensation and Damages equips you with legal and practical insights that will keep you one step ahead of opposing counsel. Don't try or settle another case without it.

Book #00682; looseleaf, one volume, 384 pages; published in 2006, updated as needed; no additional charge for updates during your subscription. Looseleaf print subscribers receive supplements. The online edition is updated automatically. ISBN: 978-1-58852-137-8

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 384
  • ISBN: 978-1-58852-137-8
  • Pub#/SKU#: 682
  • Volume(s): 1

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  • Bryan W. Butler
Bryan W. Butler approaches the issue of damages for patent infringement from a unique vantage point based on his wide range of experience in law and business. Mr. Butler's legal experience includes both in-house practice as well as law firm litigation. A patent attorney with extensive business experience, he has served as in-house Counsel for IBM Corp.'s Networking business, and as Director, Intellectual Property, Litigation, and Licensing for 3Com Corporation Business Connectivity Co. The unique analytical approach to patent infringement damages that is the basis of this treatise was developed as a result of his experiences in patent litigation and licensing. In private practice Mr. Butler also specialized in intellectual property litigation at Pennie & Edmonds LLC. He began his legal career as a damages fact witness in a patent infringement litigation. Before attending law school he was with Hewlett Packard Co. in various product planning and product development positions and with General Electric Corp. as a Strategic Planning Consultant.

Mr. Butler received a J.D. from the University of San Diego, a Masters in Business Administration from the University of Chicago Graduate School of Business, and a B.S. degree in Electrical Engineering from Swarthmore College. Mr. Butler is the author of Maximizing the Impact of Visual Evidence in Patent Litigation (PLI 1992) and State Actions to Limit Product Liability Awards 4 Prod. Liab. L. J. 129 (May 1993).

Determining the Damages Period

§ 1.01  Introduction
§ 1.02 The Outer Boundary for the Damages Period
[1] Commercial Cases
[2] Government Cases
[3] Verify Assertion Is Not Barred by Laches
§ 1.03 Determining When Infringement Starts
§ 1.04 Public Policy Behind the Marking/Notice Requirement
[1] Historical Background
[2] Avoiding Innocent Infringement
[3] Encouraging Patentees to Give Notice to the Public
[4] Encouraging Innovation by Aiding the Public to Identify Patented Articles
§ 1.05 Marking/Notice Statute Limits on Damages
[1] Determining if Patentee Is Subject to Section 287(a)
[2] Satisfying the Requirements if the Marking/Notice Statute Applies
[3] Consequences of Not Meeting the Marking/Notice Requirements
§ 1.06 Other Limitations and Extensions
[1] Foreseeability and Infringement Under the Doctrine of Equivalents
[2] Product-by-Process Infringement
[3] Design Patents
[4] False Marking and Marking Estoppel
[5] Pre-Issuance Reasonable Royalty Under the American Inventors Protection Act (Provisional Rights)
[6] Non-Statutory Double Patenting
§ 1.07 Questions of Fact and Questions of Law

Determining the Damages Base

§ 2.01 Introduction
§ 2.02 Product Scope of the Damages Base
[1] The Historical Evolution of the Market Value Rule
[2] Lost Profits and Reasonable Royalty Calculations
[3] Ascertaining the Applicable Facts
[4] Scope of the Patent
[5] Categorizing the Unpatented Components
[6] Determining if Requirements for Coverage Under the Entire Market Value Rule Have Been Met
[7] Determining if Limitations to the Entire Market Value Rule Apply
§ 2.03 Geographic Scope of the Damages Base
[1] Introduction
[2] Contributory Infringement Outside the U.S.
[3] Imported Products
[4] Systems Straddling a Border
[5] Offers to Sell in U.S. Made Outside U.S.

Established Royalty Measure of Damages

§ 3.01 Introduction
§ 3.02 Determining Whether Established Royalty Exists
[1] Paid or Secured Before the Infringement Began
[2] Paid by a Sufficient Number of Persons
[3] Uniformity
[4] Not Under Threat of Suit or in Settlement of Litigation
[5] Comparable Rights
§ 3.03 Effects on Adequate Compensation
[1] Relation to Reasonable Royalty
[2] Relation to Lost Profits

Reasonable Royalty Measure of Damages

§ 4.01 Introduction
§ 4.02 The Hypothetical Negotiation
§ 4.03 Reasonable Royalty in the Hypothetical Negotiation
[1] Georgia-Pacific Factors
[2] Application of the Georgia-Pacific Factors
[3] Throughput or Paid-Up Licenses
[4] Percentage of Sales
§ 4.04 Other Approaches
[1] Analytical Approach
[2] “Rule of Thumb’
[3] Percentage of Patentee’s Profits
[4] Percentage of Cost Savings
[5] Baseline Adjusted by Georgia-Pacific Factors
[6] U.S. Government as the Infringer
§ 4.05 Applying Enhancements and Limitations
[1] Enhancement
[2] Limitation on Reasonable Royalty
§ 4.06 Post Judgment Royalty
[1] Hypothetical Negotiation Assumptions Applicable
[2] Hypothetical Negotiation Assumptions Not Applicable

Lost Profits Measure of Damages

§ 5.01 Introduction
§ 5.02 Application of the Panduit Factors
[1] Demand for the Patented Product
[2] No Acceptable Non-Infringing Substitutes
[3] Manufacturing and Marketing Capacity to Meet the Demand
[4] Determining the Amount of Lost Profits
§ 5.03 The Holding Company Issue

Limitations on Damages

§ 6.01 Introduction
§ 6.02 Multiple Recovery and Authorization—Multiple Infringer
[1] Types of Infringing Acts and Infringers
[2] Creating Authorization
[3] Boundaries of Authorization
[4] Repair/Reconstruction
[5] Product Sales by Licensee
§ 6.03 Multiple Infringing Acts
§ 6.04 Indemnification
[1] Obligation of Indemnification
[2] Limitations on Indemnification
[3] Federal Preemption
§ 6.05 Joint Infringement

Enhancements to Damages

§ 7.01 Introduction
§ 7.02 Increased Damages Under the Damages Statute
[1] Introduction
[2] Two-Part Inquiry: Entitlement and Quantification
[3] Pre-SeagateEntitlement to Enhanced Damages for Willful Infringement
[4] Post-Seagate Entitlement to Enhanced Damages
[5] Quantification of Enhanced Damages
§ 7.03 Attorney Fees Under the Damages Statute
[1] Introduction
[2] Determination of Whether the Case is Exceptional
[3] Determination of the Attorney Fee Amount
§ 7.04 Prejudgment Interest Under Damages Statute
[1] Introduction
[2] Awarding Prejudgment Interest is the Norm
[3] Damage Components
[4] Interest Rate and Compounding

Proving Damages

§ 8.01 Introduction
[1] Standards of Proof and Review
§ 8.02 Expert Testimony
[1] Historical Admissibility
[2] Applicability of Admissibility Standards
[3] Case Outcome
§ 8.03 Record Retention
[1] Adverse Inference
[2] Defenses
§ 8.04 Bifurcation

Damages Accounting Issues

§ 9.01 Introduction
§ 9.02 Assessing Expert Testimony: Accounting Standards for Reliability
[1] Generally
[2] Admissibility Under Federal Rule of Evidence 702
[3] Probative Value of Expert Testimony and Limitations
§ 9.03 Accounting Issues in Reasonable Royalty Determination
[1] Percentage of Sales (or Revenues) Method
[2] Percentage of Profits Method
[3] Percentage of Cost Savings Method
§ 9.04 Accounting Issues in Lost Profits Determination
[1]  Panduit Factors
[2] Future Lost Profits and Prejudgment Interest
§ 9.05 Sources of Information to Support Estimation of Damages
[1] Sources of Information to Support Estimation of Damages
§ 9.06 Internal Accounting for Damages Awards

Injunctive Relief

§ 10.01 Introduction and Historical Background
§ 10.02 Equitable Standards Test
[1] Irreparable Injury
[2] Remedies Available at Law are Inadequate
[3] The Balance of Hardships Between the Plaintiff and Defendant
[4] The Public Interest
§ 10.03 Preliminary (Temporary) Injunctions