Patent Damages Question

PatentlyO235Patent damages question: Lets say a patent has a broad independent claim and a narrower dependent claim. Should the damages calculation be any different for the following three cases where: (1) the broad claim is found to be infringed & valid; (2) the narrow claim is found to be infringed & valid; or (3) both claims are found to be valid & infringed?  Further, what if the claims were found in two separate patents? Finally, what additional information would be helpful in answering this question?

32 thoughts on “Patent Damages Question

  1. Award should correspond to the total “value/contribution” of what was infringed.

    If the infringement is totally encompassed by the narrow claim, then infringement of the broader claim, didn’t provide added “value/contribution” in the infringement.

    If the infringement is not totally encompassed by the narrow claim, than the infringement has also obtained some additional “value/contribution” that is in the broader claim (e.g., value that is outside the narrower claim). In this case: there is additional value (4), beyond the value in just the narrower claim.

  2. 1. One does not get additional royalties for infringing dependent claims.

    2. With regard to so-called dependent claim being in a different patent, the answer should depend on whether there is a terminal disclaimer in response to it obviousness-type double patenting rejection. If there us, the second patent basically claims the same Invention and therefore should not deserve a second royalty. Even so, the statute seems to require a second royalty.

  3. From my perspective as someone who calculates damages for patent infringement, from a practical standpoint, the calculations in the four scenarios are often, but not always, the same. These scenarios are going to affect the calculation by impacting the two basic inputs to a royalty or lost profits calculation: the rate and the base.

    How is the “base” affected by the four scenarios, causing more or fewer products to be accused of infringement? A broad claim may cause more products to be infringing versus a narrow claim, making the calculations of (1) and (2) different. In my experience this is unlikely, but has happened: in one case I worked on, the patent covered an assay and a drug created from this particular assay, covering two products. Typically, the same universe of products infringes, but in multiple ways, causing (1) and (2), from a calculation standpoint, to be the same. Scenarios (3) and (4) are the same, but would likely be separated by patent in (4) for purposes of presentation.

    Do any of these four scenarios cause the “rate” to be different? This is going to depend on the technology at issue and the exclusionary power of the claim, namely the “ease” of acceptable, available, non-infringing alternatives. For example, you might have a “broad” claim covering a whole class of chemicals with analgesic properties, that is effectively worthless because there are five other classes that have similar effectiveness from a technological, manufacturing, and marketing standpoint. On the other hand, a very narrow patent, say one that covers the specific spacing of cogs on a gear used in spark plug timing, may be quite valuable because no other configuration offers quite the same benefits to the consumer. All else being equal, sure, a broad claim would likely command a higher rate than a narrow claim, but only to the extent it raises economic barriers that are harder to overcome. The value comes, not from the “broadness” per-se, but in its power to monopolize a lucrative market. As a practical matter, however, the bluntness of the data available in most infringement cases would not permit different rates in scenarios (1), (2), or (3), notwithstanding the pharmaceutical case above.

    The most interesting (and problematic) of the scenarios from a practitioner’s standpoint is (4), where the two claims are found in separate patents. Are they owned by the same plaintiff? Is royalty stacking an issue? Have the technologies been licensed before independently or as part of a portfolio? Is it always the same product that is infringing? Even so, is the available financial, marketing, and economic data of sufficient granularity to actually tease out different rates? Is (4) so much like (3) that we really do the same analysis as in (1)? Should the analysis be different in (4)? Maybe. Is it? Not usually: patents covering similar technology are lumped into portfolios, which mimics transactions outside litigation.

    From the lost profits side, the considerations are similar. The calculations will likely be the same, but for the monopoly power that might be different from a “broad” or “narrow” claim, subject, of course, to the presence of alternatives, i.e., would my competitor really be excluded from the market, and if so, would I sell more at a higher profit margin?

  4. Might it also make a difference if the “narrower” claim is really an “aggregation” claim? E.g., I claim an automoble with components A, B and D and a cup holder shaped …. vs. I claim a cup holder shaped ….?

  5. Assuming GP Factors apply, one would look to the plaintiff’s licensing program, which may only grant licenses by portfolio (rather than claim by claim or even patent by patent). If this is the case, the reasonable royalty as determined by a US jury could be the same for all three options based on the hypothetical negotiation (even if logic suggests it should be lower for the narrower claim).

  6. Does that matter?

    Is that the right question? Do the Georgia Pacific factors come into play in any other venue outside of the US?

  7. The broader the broadest valid and infringed claim, the less acceptable and more costly the infringer’s best non-infringing alternative tends to be. Thus, for reasonable royalty damages, the broader the valid and infringed claim, the more the infringer would have been willing to pay at the hypothetical negotiation; for lost profits damages, the broader the valid and infringed claim, the longer the accused products likely would have had to be off the market for a design-around (if one exists).

    The impact of the difference in breadth between a broader claim and a narrower claim on the acceptability and cost of the infringer’s best non-infringing alternative is a case-specific question.

  8. Thanks aaarrrggghhhh.

    This is covered by my previous posts, wherein “B” may be de minimis, or may be substantial.

  9. Claim 1 covers A
    Claim 2 covers A+B

    The infringer sells A (100 $) and A+B (150$).

    (1) and (3): damages should be based on the sales of A and A+B
    (2) damages should be based on the value of B added to A (50$)

  10. The broad claim should be considered the parent claim and the associated subinvention the narrow claims all belonging to the original conciever as long as he has a funded R+D department to be able to produce the subinvention claims. This stops patenting around to destroy the incenitive to create

  11. Good point on the Georgia Pacific factors.

    Perhaps a better question would be how have these factors actually been used over the course of the last decade (sounds like a research project right up the Professor’s alley).

  12. Each claim is a separate invention. Each claim deserves damages. If one dependent-claim invention is a subset of another independent-cliam invention, then the damages should be less for the dependent claim infringement but it should be a larger damages amount that the infringement of one claim alone.

  13. Logically the royalty would be the same for (1) and (3). Given that (3) includes both (1) and (2), and (2) is by definition narrower than and included within (dependent on) (1), in terms of ability to practice or, if the patent license is construed as exclusive, ability to exclude others, the scope of (1) and (3) is identical. All that the (3) adds is the intangible value of second claim (or patent) (2), which is of functional utility only if there is a successful challenge to (1).
    The analysis is different for (1) versus (2). The first question is whether the license is in any way exclusive (field, geographically, sole licensee, etc.). If so, then (1) is, by definition, more valuable than (2) since there is a broader right to exclude others. See Georgia Pacific factor 3 — the nature and scope of the license. Even absent exclusivity, arguably the damage value for (1) is still greater than for (2). A reasonable licensee in a hypothetical negotiation should be willing to pay more for a license that gives the licensee a broader range of product opportunities.

  14. The claim itself shouldn’t matter. The portion of the product that is captured by the claim is what should matter.

    If there is a narrow claim to a tire and a broad claim to a tire and the tire infringes both claims, then the tire matters. That is the big picture.

    Secondary considerations may come into play in damages. And, then the broadness or narrowness of the claim needs to be contextualized with the product and other factors.

  15. As I posted above at 6:24, A more narrow claim may not have a substantially different infringement value – but it also may.

  16. The value contributed to the product by a claimed feature isn’t a function of the claim’s breadth (unless, perhaps, we’re talking about an exclusive license).

    LOL – again – it depends.

  17. OK, the would-be dependent claim is written in independent form and issued as part of a second patent. It includes all the limitations of the broader claim plus a few more.

  18. I can’t recall a case that examined the quality of the claim in a damages analysis. (qualitative, pregnant, etc. etc.) This sounds more like something to come out of our lawmakers than one of our courts…

    If there are multiple infringed patents, then it would be helpful to know the ownership of the infringed patents. (single sale, patent exhaustion, etc. etc.–unless the lawmakers changed that, too.)

  19. Off the top of my head, I’d say that the per-product royalty should be generally the same in all three cases. The value contributed to the product by a claimed feature isn’t a function of the claim’s breadth (unless, perhaps, we’re talking about an exclusive license). The patentee benefits from a broad claim through a potentially larger royalty base.

    I also don’t think the patentee should generally get extra credit for having two patents for the same invention.

  20. The great lawyer answer: It depends.

    A more narrow claim may not have a substantially different infringement value.

    How do you have a dependent claim in a different patent?

  21. MY an$w€r b€£ow:

    (1): x
    (2): y
    (3): z

    x < y
    y = z

    Th€ $am€ $hou£d app£Y if th€ c£aim$ w€r€ found in $€parat€ pat€nts.

Comments are closed.