Patent Damages: Updated Rules On The Road To Economic Rationality
1 January 1999
By Dr. Phillip Beutel and Dr. Richard Rapp
This paper is intended to enumerate and discuss a set of straightforward principles, which, if followed, improve the chances that a damage award will faithfully carry out the statute's mandate to compensate for infringement.
In Section I, NERA Senior Vice President Dr. Phillip Beutel and Special Consultant Dr. Richard Rapp examine some general principles of damage estimation that, when observed, result in awards that are credible, defensible and consistent with microeconomic principles and, therefore, that achieve the make-whole standard. In Section II, the evolution of patent infringement case law is traced as it has, in fits and starts, embraced an ever-increasing number of these principles. In Section III, the implications of these principles is discussed in patentee lost-profits calculations, and an illustrative example of such a calculation is provided in Section IV. In Section V, this paper discusses and provides an example of an economic calculation of reasonable royalties.
