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April 26, 2005
Patent Infringement Damages Out of Line
Last Saturday, in advocating changes in patent law to grant leniency for patent infringement, Sanjay Prasad, Chief Patent Counsel for Oracle, asserted that the courts have been awarding damages for infringement that are out of line with the patent's real value. "No reasonable business person would ever agree to" pay those sums in licensing fees, Prasad observed at a conference sponsored by the Association for Competitive Technology, to which a murmur of "duh" was heard in the room. "There's a large distortion between the value provided realistically, and how that comes out in court." Sanjay presented no evidence to support his assertion.
Perhaps Sanjay should read Patent Hawk's Infringement Damages Primer, to be reminded that patent infringement damages are awarded as compensation, to recover what was lost during the legally assessable duration of infringement. To quote the Supreme Court (Seymour v. McCormick 1853):
The basic theory of damages is to make the patent owner whole for losses caused by the infringer's illicit activity. The patent owner is to be restored financially to the position he would have occupied but for the infringement.
The law itself is explicit that a reasonable royalty is but the floor for a patent infringement damage award.
35 U.S.C. ยง284 - Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
Put gently, perhaps Sanjay's sensation of distortion may be attributable to his corporate tunnel vision.
Posted by Patent Hawk at April 26, 2005 1:32 AM | Damages