If someone infringes on a patent that you own, you should be able to prevail in a patent infringement action. Often, however, the patent owner and the alleged infringer negotiate a settlement rather than going through a full trial. If your case does go to trial, and you receive a finding of infringement, you likely will get damages to compensate you for the losses caused by the infringement. The court also may award injunctive relief, which is discussed further here.
Section 284 of the Patent Act provides the main framework for damages in patent infringement actions. These are available only if the patent owner defeats any defenses raised by the alleged infringer, such as arguments regarding the validity of the patent or the extent to which the infringer’s product or process is equivalent to a patent claim. A jury can determine damages, but a judge will determine them if the case is not heard by a jury. Damages must be sufficient to compensate for the infringement and at least must amount to a reasonable royalty for the infringer’s use of the patented invention. The court also has the option to award up to three times the actual amount of damages incurred, if the judge feels that the situation warrants it.
Reasonable Royalties and Lost Profits
The two main types of damages awarded in patent infringement actions are reasonable royalties and lost profits. (However, the Patent Act does not limit damages to certain types, and a judge can award other types of damages that may be appropriate under the facts of the case.) A reasonable royalty is the fair market value of a license that the infringer would have purchased from the patent owner, who would receive royalties for the use of the invention. A court might calculate the fair market value of a license for one infringing item and then multiply that value by the number of items that infringed.
Meanwhile, damages for lost profits compensate the patent owner for any money that they would have made if not for the infringement. Getting these damages requires showing that your business suffered losses because of the infringement. You might be able to prove that the invention distinguished your products from your competitor’s products, such that consumers chose your products because of the invention. If your competitor steals your invention, and more consumers start buying their products because your invention has improved them, you may be able to argue that those profits should have belonged to you.
A court commonly will consider expert testimony in determining the amount of reasonable royalties and lost profits. This is because juries and judges likely will not be familiar with the industry in which the patent owner and the infringer operate. They also may not be aware of the market value for a certain product or process. Your patent attorney can help you retain an expert and present other industry evidence to support your argument for the amount of damages. The defendant may also retain an expert and present conflicting evidence to support a lesser award.