Damaging Royalties: An Overview of Reasonable Royalty Damages
![handle is hein.journals/berktech29 and id is 669 raw text is:
DAMAGING ROYALTIES: AN OVERVIEW OF
REASONABLE ROYALTY DAMAGES
Zeiln YangI
Patent litigation is big business. The allure of massive reasonable royalties
has led to the establishment of companies whose sole mission is to litigate
and win patent wars. The number of patent actions has increased at an
overall compound annual growth rate of seven percent since 1991.' It is not
hard to find the incentive for these trends: the median damages award in
2012 was $9.5 million, including three damages awards over $1 billion.2 More
troubling than the large award amounts is the fact that median damage
awards for non-practicing entities (NPEs), which include patent
aggregators, universities, and so-called patent trolls, have significantly
outpaced those for practicing entities.3 This issue is particularly pronounced
in the computer hardware and electronics, business and computer services,
and software industries.'
Once infringement of a valid patent has been established, the court must
determine remedies. Patent damages are compensatory in nature and can take
the form of either lost profits or reasonable royalties.' A patentee may
recover lost profit damages if it can show that but for the alleged
infringement, it would have earned those additional profits.' If the patentee is
unable to meet the stringent requirements for lost profit damages, it can
C 2014 Zelin Yang.
t J.D. Candidate, 2015, University of California, Berkeley, School of Law.
1. See CHRIS BARRY, RONAN ARAD, LANDAN ANSELL & EVAN CLARK,
PRICEWATERHOUSECOOPERS, 2013 PATENT LITIGATION STUDY: BIG CASES MAKE
HEADLINES, WHILE PATENT CASES PROLIFERATE 6 (2013) [hereinafter Patent Litigation
Study].
2. See id. at 7-8.
3. See id. at 7. From 1995 to 2000 the median award for NPEs was $4.6 million, while
it was $5.7 million for practicing entities. But from 2007 to 2012, the tables had turned with
NPE median awards rising to $7.2 million and practicing entity median awards dropping to
$3.8 million.
4. See id. at 16, chart 6.
5. See Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009)
(determining that the two alternative categories of compensatory damages for patent
infringement were lost profits and a reasonable royalty the patentee would have received
from arms-length bargaining).
6. See, e.g., King Instruments Corp. v. Perego, 65 F.3d 941, 952 (Fed. Cir. 1995).](ViewImageLocal?handle=hein.journals/berktech29&div=19&collection=&method=preview&ext=.png&size=3)
What Is HeinOnline?
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most
Damaging Royalties: An Overview of Reasonable Royalty Damages
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most