Federal Judicial Center

pocket guide series

Second edition
FEDERAL JUDICIAL CENTER

POCKET GUIDE SERIES

Compensatory Damages Issues in 

Patent Infringement Cases

Second Edition

William C. Rooklidge

Hon. Martha K. Gooding

Philip S. Johnson

Noreen Krall

In collaboration with judges and experts composing the 

Patent Damages Handbook Committee

Federal Judicial Center 2017

This Federal Judicial Center publication was undertaken in furtherance of 

the Center’s statutory mission to develop educational materials for the judicial branch. While the Center regards the content as responsible and valuable, this publication does not reflect policy or recommendations of the 

Board of the Federal Judicial Center.
FIRST PRINTING
iii

Contents

Introduction, v

I. Patent Damages in General, 1

A. Statutory Provisions, 1

B. Forms of Compensatory Utility Patent Damages, 2

1. Lost Profits, 3

2. Established Royalty, 8

3. Reasonable Royalty, 12

a. The Hypothetical Negotiation for a Reasonable Royalty, 

12

b. Calculating a Reasonable Royalty, 15

c. Apportionment, 29

4. Standard Setting Organizations, Reasonable and 

Nondiscriminatory Terms, and Standard Essential Patents, 

35

C. Damages or Other Monetary Relief Under the Hatch-Waxman 

Act, 39

D. Burdens, Methods, and Standards of Proof, 40

II. Early Evaluation of Patent Damages, 44

III. Pleadings and Mandatory Initial Disclosures, 48

IV. Discovery, 58

A. Phased Discovery, 58

B. Accelerated Damages Discovery, 59

C. Protective Orders, 60

D. Limits on Depositions, 63

E. Document Retention and Production, 65

F. Mandatory Final Disclosures and Supplementation, 67

V. Summary Judgment Motions, 68

A. Timing of Summary Judgment on Damages, 68

B. Potential Damages Issues Amenable to Summary Disposition, 

70

VI. Pretrial Case Management, 76

A. Pretrial Conference and Order, 76

B. Challenges to Expert Testimony Regarding Damages, 78

1. The Court’s Gatekeeper Role and Rule 702 Challenges, 78

2. Procedures and Timing for Rule 702 Challenges, 84

3. Effect of a Successful Rule 702 Challenge: Do-Over? 87
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

iv

4. Effect of a Successful Rule 702 Challenge: Alternative 

Sources of Damages Evidence, 91

C. Court-Appointed Damages Experts, 93

D. In Limine Motions, 97

VII. Trial, 99

A. Separate Trials, 99

B. Voir Dire, 106

C. Procedures to Aid the Jury’s Understanding, 107

D. Objections, 107

E. JMOL at the Close of Evidence, 108

F. Verdict Forms, 108

VIII. Posttrial, 112

A. Renewed JMOL Motions, Motions for New Trial and

Remittitur, 112

B. Ongoing Royalties, 113

C. Findings of Fact and Conclusions of Law, 117
v

Introduction

Several years ago, then-Chief Judge Paul R. Michel of the U.S. 

Court of Appeals for the Federal Circuit brought together a 

diverse group of lawyers, judges, academics, and experts to 

develop a guide for trial courts to consult when faced with 

issues of compensatory damages in patent infringement 

cases. The goal was to bring to bear the participants’ collective experience on how best to address and resolve patent 

damages issues, all within the overarching framework of 

achieving the “just, speedy, and inexpensive determination of 

every action and proceeding.”1 The first edition of this pocket 

guide, published in 2011, was the result.

As that initial publication recognized, however, patent infringement damages is a continuously evolving area of law. In 

the intervening years, the courts not only have continued to 

refine the legal principles that govern the determination of 

patent infringement damages, but also have implemented a 

variety of case-management techniques that focus on patent 

damages. Judge Jeremy Fogel, director of the Federal Judicial 

Center, therefore requested a revised patent damages guide 

to reflect the current state of the law and the courts’ evolving 

case-management efforts. This second edition is the result.

As with the original, this revised guide does not attempt 

to provide a comprehensive explication of substantive damages law or to predict its future evolution. Rather, it is intended to focus on case-management practices that may be 

helpful to the courts in the adjudication of patent infringement damages. Because judges have requested inclusion of 

more substantive damages law, however, we have added 

more detail in this regard, but we have stopped well short of 

presenting a patent damages treatise.

We would like to thank Judge Andrew Guilford (C.D. Cal.) 

and Judge Rebecca Pallmeyer (N.D. Ill.) for their thoughtful 

 

1. Fed. R. Civ. P. 1. Unless otherwise indicated, all references in this guide to the 

“Rules” are to the Federal Rules of Civil Procedure.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

vi

review of this manuscript and for their helpful suggestions. 

The content of this guide has not been reviewed or endorsed 

by the U.S. Court of Appeals for the Federal Circuit or any 

judge of that court; the guide was prepared only by the members of the Patent Damages Handbook Committee. Thus, the 

practices set forth are not intended to be “official” in any 

sense, nor do they represent policy or recommendations of 

the Federal Judicial Center or its Board. No member of this 

committee, or the company, law firm, or client that employs 

that member, or the court on which that member serves, endorses the application of any particular practice in any particular case. Moreover, this guide is not intended to suggest 

that current law needs (or does not need) judicial or legislative revision. Rather, it is intended simply to be a helpful resource for judges, judicial clerks, and lawyers under current 

law.

In compiling this guide, we have continued to look to and 

draw from the work of others, including the Center’s Patent 

Case Management Judicial Guide,

2 the National Jury Instruction Project,3 and the local patent rules, standing orders, and 

general orders of various district courts. We continue to recognize that “the rich variety of cases and rapidly evolving patent ecosystem” require district court judges to exercise their 

informed judgment and discretion.4 Accordingly, those who 

consult this guide will need to supplement and tailor the practices and approaches discussed to the circumstances of each 

particular case.

 

2. Peter S. Menell et al., Patent Case Management Judicial Guide (3d ed. 2016) 

[hereinafter “Patent Management Guide”].

3. The National Jury Instruction Project, Model Patent Jury Instructions (2009) [hereinafter “Model Patent Instructions”] (http://www.nationaljuryinstructions.org).

4. Patent Management Guide, supra note 2, at 1–2.
Introduction

vii

Patent Damages Handbook Committee

Judge Jeremy D. Fogel

United States District Court for the Northern District of California

Director, Federal Judicial Center

Judge Martha K. Gooding 

Superior Court of the State of California, Orange County

Judge Marilyn L. Huff

United States District Court for the Southern District of California

Paul S. Grewal

Facebook, Inc.

Philip S. Johnson, Esq.

Robert S. Knudsen

Nathan Associates, Inc.

Noreen Krall, Esq. 

Apple Inc.

William C. Rooklidge, Esq. 

Gibson, Dunn & Crutcher

Mary A. Woodford

Cornerstone Research

1

I. Patent Damages in General

Although this guide is not intended to be a comprehensive 

treatise on patent infringement compensatory damages or a 

definitive interpretation of the extensive judicial precedent 

on the subject, it is helpful to set forth the legal framework 

and context for the procedural practices described later.

A. Statutory Provisions

Section 284 of the patent statute (35 U.S.C. §§ 1–376) addresses damages, both compensatory and enhanced. The 

portion directed to compensatory damages states:5

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. When the damages 

are not found by a jury, the court shall assess them . . . .

The court may receive expert testimony as an aid to the 

determination of damages or of what royalty would be reasonable under the circumstances.6

An important principle flows from this statutory mandate. 

Patent infringement damages are compensatory, designed to 

make the patentee whole. The damages inquiry “must concentrate on compensation for the economic harm caused by 

 

5. The patent statute also affords the patent owner the opportunity to obtain 

damages enhanced up to treble damages, attorney fees, costs, and prejudgment interest, 35 U.S.C. §§ 284–285, and, to the owner of a design patent, the infringer’s “total 

profit.” See 35 U.S.C. § 289; Comcast Holdings I LLC v. Sprint Comm’ns Co., 850 F.3d 

1302, 1313–14 (Fed. Cir. 2017); Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429, 434–

36 (2016); Nordock, Inc. v. Sys. Inc., 803 F.3d 1344, 1352–57 (Fed. Cir. 2015); Nike Inc. 

v. WalMart Stores, Inc., 138 F.3d 1437, 1441–48 (Fed. Cir. 1998). Determining whether 

to award and the amount of attorney fees and enhanced damages in patents cases 

deserves its own treatise, while determining whether to award and the amount of 

costs and interest does not vary greatly from the manner appropriate in other commercial disputes. Thus, these topics are beyond the scope of this guide.

6. 35 U.S.C. § 284.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

2

infringement of the claimed invention.”7 An award of compensatory patent infringement damages attempts to assess “the 

difference between the [patentee’s] pecuniary condition after 

the infringement, and what his condition would have been if 

the infringement had not occurred.”8 The question to be 

asked in determining such damages is “had the Infringer not 

infringed, what would [the] Patent Holder . . . have made?”9

B. Forms of Compensatory Utility Patent Damages

Compensatory damages for utility patent infringement traditionally have fallen into three categories, one or all of which 

may be involved in a particular case:10 lost profits, established 

royalty,11 and reasonable royalty.12 In addition, the court may 

 

7. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010).

8. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009) (quoting Yale Lock Mfg. Co. v. Sargent, 117 U.S. 536, 552 (1886)).

9. Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 507 (1964); 

Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc).

10. State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1577 (Fed. Cir. 1989) 

(award split between lost profits and reasonable royalty). Indeed, where the trial 

court eliminates on posttrial motion a lost profits award with respect to a portion of 

the infringing devices, it must consider an appropriate other measure of damages for 

that portion. Siemens Med. Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, 

Inc., 637 F.3d 1269, 1290 (Fed. Cir. 2011).

11. The Federal Circuit’s repeated statements that “[t]here are two alternative categories of compensatory damages available under § 284: the patentee’s lost profits and 

the reasonable royalty he would have received through arms-length bargaining,” 

Nordock, 803 F.3d at 1352; Lucent Techs., 580 F.3d at 1324, overlooks the category of 

damages known as “established royalty.” Although sometimes incorrectly characterized as a reasonable royalty, see Monsanto Co. v. McFarling, 488 F.3d 973, 978 (Fed. Cir. 

2007), the established royalty is, strictly speaking, a form of actual damages and is “reasonable” in the sense that it typically provides the “best measure” of a royalty for the 

use made of the invention. Id. The relatively rigorous requirements for finding an established royalty based on previous third-party license agreements, see, e.g., Rude v. 

Westcott, 130 U.S. 165 (1889), do not apply to the use of such license agreements in the 

reasonable royalty analysis. See, e.g., Lucent Techs., 580 F.3d at 1325–26 (applying comparability standard).

12. A fourth form of compensatory damages, the infringer’s profits from the infringement, was eliminated by statute in 1946 for all but design patents. See Aro, 377 

U.S. at 505; see also 35 U.S.C. § 289; Nike, 138 F.3d at 1442.
I. Patent Damages in General

3

award prejudgment interest under 35 U.S.C. § 284 on the compensatory portion of the damages award,13 prejudgment interest on any award of attorney fees,14 postjudgment interest under Federal Rule of Civil Procedure 37 on the entire award,15

and ongoing royalties.16

1. Lost Profits

Lost profits normally are proved by determining what profits 

would have been made by the patentee “but for” the infringement.17 That is, to obtain lost profits damages, the patent 

owner “must show a reasonable probability that, ‘but for’ the 

infringement, it would have made the sales that were made by 

the infringer.”18 The patent owner makes this showing by establishing what profits it “would have made absent the infringing product.”19 And the patent owner must support its 

analysis with “sound economic proof of the nature of the market and likely outcomes with infringement factored out of the 

economic picture.”20

 

13. Gen. Motors Corp. v. Devex Corp., 461 U.S. 648 (1983) (prejudgment interest 

award is the norm); Sanofi-Aventis v. Apotex Inc., 659 F.3d 1171 (Fed. Cir. 2011) (prejudgment interest denied when contract limited compensatory damages solely to a 

percentage of infringer’s net sales); Group One Ltd. v. Hallmark Cards, Inc., 407 F.3d 

1297 (Fed. Cir. 2003) (prejudgment interest may be denied for period in which patent 

is expired and owner fails to reinstate); Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983) (no prejudgment interest on enhanced damages portion).

14. Mathis v. Spears, 857 F.2d 749 (Fed. Cir. 1988) (prejudgment damages may 

be awarded on attorney fees).

15. Tronzo v. Biomet, Inc., 318 F.3d 1378 (Fed. Cir. 2003) (postjudgment interest). Where willful infringement is found, the court may enhance the amount of damages awarded up to three times under 35 U.S.C. § 284. See In re Seagate Tech., LLC, 

497 F.3d 1360 (Fed. Cir. 2007) (en banc). If the case is adjudged to be “exceptional,” 

attorneys’ fees (in addition to costs) may be awarded to the prevailing party. See 35 

U.S.C. § 285.

16. See Paice v. Toyota Motor Corp., 504 F.3d 1293, 1314–15 (Fed. Cir. 2007).

17. Rite-Hite, 56 F.3d at 1545; BIC Leisure Prods. v. Windsurfing Int’l, 1 F.3d 1214, 

1218 (Fed. Cir. 1993).

18. Akamai Techs., Inc. v. Limelight Networks, Inc., 805 F.3d 1368, 1379 (Fed. Cir. 

2015); Rite-Hite, 56 F.3d at 1545.

19. Akamai, 805 F.3d at 1379.

20. Id.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

4

One accepted (but not exclusive) test for lost profits damages—often referred to as the “Panduit” test21—requires that 

the patent owner establish “(1) demand for the patented 

product; (2) absence of acceptable noninfringing substitutes; 

(3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit it would have made.”22 Satisfying this four-part test establishes an inference that the lost 

profits claimed were in fact caused by the infringing sales and 

sustains the patentee’s burden of proving entitlement to lost 

profits owing to the infringing sales.23 The burden then shifts 

to the infringer to show that the inference is unreasonable for 

some or all of the lost sales.24 Whether lost profits are legally 

compensable in a particular situation is a question of law.25

The Panduit test is not absolute in that failure to meet one 

of the factors does not necessarily disqualify a loss from being compensable. For example, a patentee in a multi-supplier 

market with available noninfringing alternatives nonetheless 

can seek lost profits for a portion of the infringing sales based 

on the patentee’s share of the market absent the infringement.26 Application of this “market-share approach” will result in the patentee being compensated for some portion of 

the infringement by way of lost profits and the remainder by 

way of reasonable royalty. This approach requires, however, 

 

21. See Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 

1978). The Federal Circuit has described the Panduit test as a “standard way of proving lost profits,” a “nonexclusive standard for determining lost profits,” as “approved 

generally,” and as “usually straightforward and dispositive.” State Indus., Inc. v. MorFlo Indus., Inc., 883 F.2d 1573, 1577–79 (Fed. Cir. 1989).

22. Mentor Graphics Corp. v. Eve-USA, Inc., 851 F.3d 1275, 1285 (Fed. Cir. 2017); 

Rite-Hite, 56 F.3d at 1545.

23. Rite-Hite, 56 F.3d at 1545; Versata Software Inc. v. SAP Am., Inc., 717 F.3d 1255, 

1264 (Fed. Cir. 2013) (“A showing under the four-factor Panduit test establishes the 

required causation.”); see also Mentor Graphics, 851 F.3d at 1285 (“Together, requiring patentees to prove demand for the product as a whole and the absence of noninfringing alternatives ties lost profit damages to specific claim limitations and ensures that damages are commensurate with the value of the patented features.”). 

24. Rite-Hite, 56 F.3d at 1545.

25. Am. Seating Co. v. USSC Grp., Inc., 514 F.3d 1262 (Fed. Cir. 2008); Poly-Am., 

L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004).

26. See Mor-Flo, 883 F.2d at 1577–79.
I. Patent Damages in General

5

that the patentee competed in the same market as the infringer and had the ability to make the sales that were made 

by the infringer.27

The first Panduit factor—whether demand existed for the 

“patented product”—may be restated as whether demand existed for “a product that is ‘covered by the patent in suit’ or 

that ‘directly competes with the infringing device.’”28 Focus 

on particular features corresponding to individual claim limitations is unnecessary for the first Panduit factor, but instead 

“the elimination or substitution of particular features corresponding to one or more claim limitations goes to the availability of acceptable noninfringing substitutes under the second Panduit factor.”29 A “patentee cannot show entitlement 

to a higher price divorced from the effect of that higher price 

on demand for the product” because “[a]ll markets must respect the law of demand,” which counsels that “consumers 

almost always purchase fewer units of a product at higher 

price than a lower price, possibly substituting other products.”30 And the patentee must show that the infringing units 

do not “possess characteristics significantly different from 

the [patentee’s product].”31

As to the second Panduit factor, to be “available” for purposes of a lost profits analysis, an acceptable noninfringing 

substitute must have been “available or on the market” at the 

time of infringement.32 A fact finder “must proceed with caution in assessing proof of the availability of substitutes not 

 

27. BIC Leisure, 1 F.3d at 1218.

28. DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1330 (Fed. 

Cir. 2009), quoting Rite-Hite, 56 F.3d at 1548–49.

29. DePuy Spine, 567 F.3d at 1331.

30. Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc., 246 F.3d 

1336, 1357 (Fed. Cir. 2001); see also BIC Leisure, 1 F.3d at 1218.

31. Kaufman Co. v. Lantech, Inc., 926 F.2d 1135, 1142 (Fed. Cir. 1991).

32. Siemens Med. Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., 

637 F.3d 1269, 1288 (Fed. Cir. 2011) (citing Grain Processing Corp. v. Am. Maize-Prods. 

Co., 185 F.3d 1341, 1349 (Fed. Cir. 1999)).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

6

actually sold during the period of infringement.”33 Nevertheless, a substitute that was not on sale at the time of infringement but that could have been readily commercialized may 

be “available” for purposes of a lost profits determination.34

Where an alleged substitute was not on the market during the 

damages period, the accused infringer has the burden to 

overcome the inference that the substitute was not “available.”35

Patentees enjoy “significant latitude to prove and recover 

lost profits for a wide variety of foreseeable economic effects 

of the infringement.”36 For example, lost profits damages may 

account for both lost sales and a reduction of price owing to 

the infringing competition—that is, price erosion.37 To prove 

price erosion damages, a patent holder must show that “but 

for” the infringement, it would have sold its product at a 

higher price.38 A price erosion analysis also must account for 

the effect of a higher price on demand for the product as well 

as the impact of acceptable noninfringing alternatives on the 

market.39

Sales of unpatented or noninfringing components or products may be included in an award of lost profits damages under certain circumstances. Application of the “entire market 

value rule,” which is discussed more fully below with respect 

to reasonable royalty damages, requires that (1) the infringing component or feature is the basis for customer demand 

 

33. Grain Processing, 185 F.3d at 1353.

34. Siemens, 637 F.3d at 1288.

35. SynQor Inc. v. Artesyn Techs., Inc., 709 F.3d 1365, 1382 (Fed. Cir. 2013); DePuy 

Spine, 567 F.3d at 1331; Grain Processing, 185 F.3d at 1353.

36. Grain Processing, 185 F.3d at 1350; Am. Seating, 514 F.3d at 1270.

37. Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348, 

1378 (Fed. Cir. 2013) (“We thus recognize the economic principle of ‘price erosion’ 

in calculating compensatory damages for patent infringement.”).

38. SynQor, 709 F.3d at 1381.

39. Id. (“[B]ecause ‘a rational would-be infringer is likely to offer an acceptable 

non-infringing alternative, if available, to compete with the patent owner rather than 

leave the market altogether,’ the analysis must consider the impact of such alternate 

technologies on the market as a whole.” (quoting Grain Processing, 185 F.3d at 1350–

51)).
I. Patent Damages in General

7

for the entire product, (2) the infringing and noninfringing 

components are sold together so they constitute a functional 

unit or are parts of a complete machine or single assembly of 

parts, and (3) the infringing and noninfringing components 

are analogous to a single functioning unit.40 “A convoyed sale 

is a sale of a product that is not patented, but is sufficiently 

related to the patented product such that the patentee may 

recover lost profits for lost sales.”41 Being sold together with 

the patented product merely for “convenience or business advantage,”42 or solely to satisfy customer demand,43 is not 

enough to establish a relationship sufficient to recover lost 

profits.44 That the allegedly convoyed product has a use independent of the patented product suggests a nonfunctional relationship.45

Although “the recovery of lost profits is not limited to the 

situation in which the patentee is selling the patented device,”46 to be recoverable, the lost profits must be those of the 

patentee. That is, “a patentee may not claim, as its own damages, the lost profits of a related company.”47 And lost profits 

 

40. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549–50 (Fed. Cir. 1995); Funai 

Elec. Co., Ltd. v. Daewoo Elec. Corp., 616 F.3d 1357, 1375–76 (Fed. Cir. 2010) (affirming 

award of lost profits based on entire lost sales value, where there was evidence that 

the benefits provided by the patented technology “were the basis for customer demand”).

41. Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1375 (Fed. Cir. 

2015); see also Am. Seating, 514 F.3d at 1268. 

42. Warsaw Orthopedic, 778 F.3d at 1375; Am. Seating, 514 F.3d at 1268.

43. Am. Seating, 514 F.3d at 1268–69.

44. For example, “pull-through” sales, sales of unrelated products based on the 

business relationship developed by sales of the patented products but that neither 

compete with nor function with the patented products, are not compensable as lost 

profits. DePuy Spine, 567 F.3d at 1333–34.

45. Warsaw Orthopedic, 778 F.3d at 1375; see also DePuy Spine, 567 F.3d at 1333.

46. Poly-Am., L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004).

47. Warsaw Orthopedic, 778 F.3d at 1375; see also Poly-Am., 383 F.3d at 1311. Normally a patentee may not recover as lost profits damages “true-up” payments that 

may be based in large part on patent license royalties. Warsaw Orthopedic, 778 F.3d 

at 1377.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

8

damages “must come from the lost sales of a product or service the patentee itself was selling.”48

“The traditional understanding that our patent law operates only domestically and does not extend to foreign activities is embedded in the Patent Act itself, which provides that 

a patent confers exclusive rights in an invention within the 

United States.”49 Although lost profits may be awarded for foreign sales of the patented items manufactured in the United 

States and sold to foreign buyers by the U.S. manufacturer,50

the presumption against extraterritoriality prohibits awarding lost profits for damages resulting from a third party’s foreign use of the infringing products.51 Likewise, loss of sales in 

foreign markets, even though an accused infringer became a 

direct competitor of the patentee as a result of infringement 

within the United States, is not compensable as lost profits.52

Analogously, damages are not available for sales made during 

the pediatric exclusivity period after the patent has expired,

because the injured party’s rights are not attributable to patent infringement.53

2. Established Royalty

Where it can be proven, an established royalty usually will be 

the best measure of damages.54 An established royalty can be 

 

48. Warsaw Orthopedic, 778 F.3d at 1376; see also Rite-Hite, 56 F.3d at 1548; PolyAm., 383 F.3d at 1311.

49. Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007).

50. Brown v. Duchesne, 60 U.S. 183 (1856); Goulds’ Mfg. Co. v. Cowing, 105 U.S. 

253 (1881); Dowagiac Mfg., Co. v. Minn. Moline Plow Co., 235 U.S. 641 (1915).

51. WesternGeco L.L.C. v. ION Geophysical Corp., 791 F.3d 1340, 1349 (Fed. Cir. 

2015).

52. Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348 

(Fed. Cir. 2013).

53. See AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1344 (Fed. Cir. 2015).

54. Clark v. Wooster, 119 U.S. 322, 326 (1886) (“It is a general rule in patent 

causes that established license fees are the best measure of damages that can be 

used.”); see also Burdell v. Denig, 92 U.S. 716, 719 (1876); Birdsall v. Coolidge, 93 U.S. 

64, 70 (1876); cf. Nickson Indus., Inc. v. Rol Mfg. Co., 847 F.2d 795, 798 (Fed. Cir. 1988) 

(“Where an established royalty exists, it will usually be the best measure of what is 

a ‘reasonable’ royalty.”).
I. Patent Damages in General

9

proven in two ways. First, the parties to the lawsuit may have 

previously entered into an agreement by which the patentee 

and accused infringer set the price for a license, but one or 

both of the parties did not perform under the agreement. In 

that circumstance, the royalty required by the agreement ordinarily will be treated as an established royalty.55

Second, the patentee may have granted licenses to third 

parties, licenses to which the infringer is a “stranger.” To constitute an established royalty, however, such third-party licenses must be repeated, uniform licensing transactions in 

which the market actually has valued a license to the very patents at issue in the context of conduct comparable to that of 

the accused infringer.56 For a royalty to be established by 

third-party licenses, it “must be paid by such a number of persons as to indicate a general acquiescence in its reasonableness by those who have occasion to use the invention.”57

Thus, a single third-party license agreement cannot demonstrate uniformity or acquiescence in the reasonableness of a 

royalty rate.58 Proof of an established royalty normally requires a showing that it was the patentee’s regular practice to 

grant to third parties licenses that authorize conduct of the 

kind engaged in by the infringer at an established royalty 

 

55. See Seymour v. McCormick, 57 U.S. 480, 490–91 (1854) (reversing damages 

award for more than the established royalty set by defendants’ licenses). Accord Middleton v. Wiley, 195 F.2d 844, 846 (8th Cir. 1952) (reversing denial of established royalty damages); Seal-Flex, Inc. v. W.R. Dougherty & Assocs., 254 F. Supp. 2d 647, 655 

(E.D. Mich. 2003) (“In light of the existence of an established royalty, the Court need 

not engage in the process of determining a hypothetical royalty.”).

56. See Monsanto Co. v. McFarling, 488 F.3d 973, 978 (Fed. Cir. 2007); Nickson, 

847 F.2d at 798 (absent proof of unusual circumstances, such as widespread infringement that artificially depressed royalty, established royalty is best measure of damages); Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1078 (Fed. Cir. 1983) 

(same).

57. Rude v. Westcott, 130 U.S. 165 (1889); see also Faulkner v. Gibbs, 199 F.2d 

635, 639 (9th Cir. 1952).

58. Trell v. Marlee Elecs. Corp., 912 F.2d 1443, 1446 (Fed. Cir. 1990); Hanson, 718 

F.2d at 1078.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

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rate.59 In this context, the Supreme Court has rejected consideration of third-party license agreements entered into to resolve litigation.60 Perhaps because the required proof is so exacting, an established royalty is the least common form of patent infringement damages sought or awarded.

Although some Federal Circuit cases have referred to an 

established royalty as a form of “reasonable royalty,”61 others 

have properly distinguished between the two, recognizing 

that an established royalty is analytically different from the 

reasonable royalty resulting from the hypothetical negotiation between the willing seller and willing buyer summarized 

in the Georgia-Pacific opinion.62 Although the first factor eval-

 

59. Rude, 130 U.S. at 165. In Monsanto v. Ralph, 382 F.3d 1374, 1383–84 (Fed. Cir. 

2004), the Federal Circuit rejected an established royalty argument based on an 

agreement that imposed a “Technology Fee” that authorized “only a narrow, contractually agreed-upon, use,” rather than the infringer’s use. Accord Monsanto Co. v. David, 516 F.3d 1009, 1018 (Fed. Cir. 2008) (same); McFarling, 488 F.3d at 978–79 (same).

In Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1582–83 (Fed. Cir. 1983), the Federal 

Circuit rejected use of a franchise agreement that imposed a “royalty and service 

fee” as an established royalty.

60. Rude, 130 U.S. at 165. There is no corresponding bar to considering settlement agreements in connection with a reasonable royalty analysis. See 

ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 872 (Fed. Cir. 2010) (in this reasonable 

royalty case, the most reliable license in the record arose out of litigation); Prism 

Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1372 (Fed. Cir. 2017) (in dicta limiting Rude’s holding on litigation settlements to the established royalty context). 

61. In Hanson, 718 F.2d at 1078, the Federal Circuit divided damages into two 

kinds—actual damages (namely, lost profits) and a reasonable royalty that “may be 

based upon an established royalty, if there is one, or if not upon a hypothetical royalty resulting from arm’s length negotiations between a willing licensor and a willing 

licensee.”

62. See Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1121 

(S.D.N.Y. 1970), modified and aff’d, 446 F.2d 295 (1971), cert. denied, 404 U.S. 870 

(1971) (“The parties agree there is no ‘established’ royalty . . . . Consequently, it is 

necessary to resort to a broad spectrum of other evidentiary facts probative of a 

‘reasonable’ royalty.”); Integra Life Sciences I, Ltd. v. Merck KgaA, 331 F.3d 860, 869 

(Fed. Cir. 2003) (“[A]n injured patentee enjoys at least a reasonable royalty even 

when unable to show lost profits or an established royalty rate.”); Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1311 (Fed. Cir. 2002) (“The statute guarantees 

patentees a reasonable royalty even when they are unable to prove entitlement to 

lost profits or an established royalty rate.”). The Supreme Court has distinguished 
I. Patent Damages in General

11

uated under the Georgia-Pacific hypothetical negotiation approach is the “royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an 

established royalty,” the district court in that case recognized 

that it needed to resort to the hypothetical negotiation approach only because there was no established royalty.63 In 

other words, an established royalty ordinarily eliminates the 

need to employ the hypothetical negotiation construct to 

identify the reasonable royalty. As the Supreme Court has explained, where “there was no established royalty . . . it was 

permissible to show the value by proving what would have 

been a reasonable royalty . . . .”64

In most instances where an established royalty can be 

proved, it will be the appropriate measure of damages. But 

there are circumstances in which it may not be. For example, 

the Supreme Court in Birdsall v. Coolidge65 held that an established royalty should not be awarded “arbitrarily and without 

any qualification,” and it reversed a damages judgment as excessive “where the patented improvement has been used 

only to a limited extent and for a short time.”66 Similarly, the 

 

established royalty from a reasonable royalty in General Motors Corp. v. Devex Corp., 

461 U.S. 648, 651–52 n.5 (1983), and Dowagiac, 235 U.S. at 648.

63. Georgia-Pacific, 318 F. Supp. at 1121. Accord Hughes Aircraft Co. v. United 

States, 86 F.3d 1566, 1568 (Fed. Cir. 1996); Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 

512, 517 (Fed. Cir. 1995); Rite-Hite, 56 F.3d at 1554; Wang Labs., Inc. v. Toshiba Corp., 

993 F.2d 858, 870 (Fed. Cir. 1993); Trell, 912 F.2d at 1446; Fromson v. Western Litho 

Plate & Supply Co., 853 F.2d 1568, 1574 (Fed. Cir. 1988).

64. Dowagiac, 235 U.S. at 648.

65. 93 U.S. at 70. Birdsall suggested in dicta that damages could under some 

circumstances exceed the established royalty, but cited only authorities dealing with 

awards of other forms of “actual” damages, the patentee’s lost profits or the thenauthorized equitable remedy of an award of the infringer’s profits. Id.

66. In the context of “reasonable compensation” for use of patented inventions 

by the government, the Federal Circuit’s predecessor court in Tektronix, Inc. v. United 

States, 552 F.2d 343, 347 & n.5 (Ct. Cl. 1977), explained in dicta that “[e]ven an established royalty may be modified upward . . . depending on the circumstances of the 

case,” citing Meurer Steel Barrel Co. v. United States, 85 Ct. Cl. 554, 34 U.S.P.Q. 123, 127 

(1937), which held in the context of “reasonable compensation” for use of a patented 

invention by the government that the patentee’s uniform license rate did not show 

an established royalty because half its agreements were entered into to settle ongoing litigation.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

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Supreme Court and Federal Circuit have stated on several occasions, albeit not in the form of a holding in a patent infringement context, that an established royalty does not set a ceiling for patent infringement damages where widespread infringement artificially depressed the established royalty.67

3. Reasonable Royalty

In most patent cases, the patent owner seeks reasonable royalty damages, either for infringement for which it cannot 

prove lost profits or established royalty damages, or as an alternative damages theory.68 “The reasonable royalty theory of 

damages . . . seeks to compensate the patentee not for lost 

sales caused by infringement, but for its lost opportunity to 

obtain a reasonable royalty that the infringer would have 

been willing to pay if it had been barred from infringing.”69

a. The Hypothetical Negotiation for a Reasonable 

Royalty

The most common approach to calculating reasonable royalty damages is the “hypothetical negotiation” or “willing 

seller–willing buyer” methodology, in which the trier of fact 

 

67. “Though established royalty rates are normally applicable,” the Federal Circuit noted in dicta in Bio-Rad Labs., Inc. v. Nicolet Instrument Corp., 739 F.2d 604, 617 

(Fed. Cir. 1984), “they do not necessarily establish a ceiling for the royalty that may 

be assessed after an infringement trial.” Then, four years later, the Federal Circuit in 

Nickson opined, again in dicta, that the patentee “correctly states that a royalty ‘reasonable’ under 35 U.S.C. § 284 may be greater than an established royalty.” 847 F.2d 

at 798 (citing Bio-Rad Labs., 739 F.2d at 617). The court went on to speculate that “a 

higher figure may be awarded when the evidence clearly shows that widespread infringement made the established royalty artificially low.” Id. Likewise, circumstances 

might justify award of a lower figure, but these deviations should be the exception 

from the rule.

68. A damages award may consist of lost profits for a portion of the accused 

infringements and reasonable royalty for the remainder of the infringements. See 

TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 898 (Fed. Cir. 1986). For example, this 

approach is commonly applied where the patent owner seeks to prove lost profits 

based on market share. See State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 

1577 (Fed. Cir. 1989).

69. AstraZeneca, 782 F.3d at 1334 (citing Lucent Techs., Inc. v. Gateway, Inc., 580 

F.3d 1301, 1325 (Fed. Cir. 2009)).
I. Patent Damages in General

13

determines what a willing licensee in the place of the infringer 

reasonably would have paid, and what a willing licensor in the 

place of the patentee reasonably would have accepted, for the 

grant of a license under the patent-in-suit, if such a license 

had been negotiated before the infringement began.70 This approach requires the assumption that both parties reasonably 

wished to enter into a license and that both parties conducted 

the negotiation based on the understanding that the patent 

was valid, enforceable, and infringed.71

The first step in this type of royalty analysis is to determine when the asserted infringement began, because the hypothetical license would have been negotiated before the infringing activity began.72 The correct determination of this 

 

70. Lucent, 580 F.3d at 1325 (“The hypothetical negotiation tries, as best as possible, to create the ex ante licensing negotiation scenario and to describe the resulting agreement.”). Courts imported the willing buyer–willing seller methodology from 

other areas of law, where it continues to be applied. See, e.g., Gaylord v. United 

States, 773 F.3d 1363, 1368 (Fed. Cir. 2015) (applying willing buyer–willing seller methodology in context of U.S. government’s unauthorized use of a copyrighted work, 

relying on copyright infringement cases). Courts have emphasized that the willing 

buyer–willing seller methodology is not the only way to determine reasonable royalty damages, see United States v. Virginia Electric & Power Co., 365 U.S. 624, 633 

(1961) (willing buyer–willing seller methodology “not an absolute standard nor an 

exclusive method of valuation”).

71. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1544 (Fed. Cir. 1995); Lucent, 580 

F.3d at 1325. Courts sometimes refer to an “analytical approach” to calculating reasonable royalty damages, which focuses on the infringer’s internal profit projections 

for the infringing item at the time the infringement began and then apportions the 

projected profits between the patent owner and the infringer. See, e.g., Lucent, 580 

F.3d at 1324. Such an approach has not been applied in a precedential Supreme Court 

or Federal Circuit case, however, and would not eliminate the need to apportion damages between patented and unpatented features or components of the accused products, to ensure that the patentee is fairly compensated only for the value of the 

claimed invention.

72. Integra, 331 F.3d at 870 (hypothetical negotiation occurs “at a time before 

the infringing activity began”); Lucent, 580 F.3d at 1324 (hypothetical negotiation 

takes place “before infringement began”); LaserDynamics, Inc. v. Quanta Computers, 

Inc., 694 F.3d 51, 75 (Fed. Cir. 2012) (date of hypothetical negotiation is the date infringement began). Determination of the date of the hypothetical negotiation is a legal conclusion that may depend on factual findings. Because the date affects not only 

the hypothetical negotiation framework, but perhaps also the facts that may be considered in the analysis, testifying experts often present analyses based on different 
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

14

date “is essential for properly assessing damages.”73 The timing of the hypothetical negotiation can make a significant difference in the economic risks and rewards the negotiating 

parties would have factored into their negotiations.74 In some 

cases, there may be more than one hypothetical negotiation 

date, for example if alleged infringement by different products 

began at different times75 or if there are multiple patents at 

issue and the infringements of the patents began at different 

times.

In addition to ascertaining the proper date of the hypothetical negotiation, it may be important to identify the parties to the negotiation, for example, where the ownership of 

the patent-in-suit has changed and the patent holder at the 

time of the hypothetical negotiation is not the patent holder 

at the time the litigation is brought and damages are calculated.76

Damages are not based on a hindsight evaluation of what 

happened, but on what the parties to the hypothetical license 

negotiations would have agreed upon.77 Nevertheless, evidence relevant to the negotiation is not necessarily limited to 

 

hypothetical negotiation dates, and the court should instruct the jury on the date of 

hypothetical negotiation if possible. 

73. LaserDynamics, 694 F.3d at 75; Integra, 331 F.3d at 870 (the value of a hypothetical license negotiated in one year could be “drastically different” from one negotiated a year later; remanding case to trial court for determination of hypothetical 

negotiation date and recalculation of damages).

74. Integra, 331 F.3d at 870 (“a year can make a great difference in economic risks 

and rewards” and change the “risks and expectations” of the parties to the hypothetical negotiation).

75. See Applied Med. Res. Corp. v. U.S. Surgical Corp., 435 F.3d 1356, 1363 (Fed. 

Cir. 2006) (where infringement caused by sales of two different products began at 

different times, they require “two different hypothetical negotiation dates”).

76. See, e.g., Oracle Am., Inc. v. Google, Inc., 798 F. Supp. 2d 1111, 1116–17 (N.D. 

Cal. 2011) (patentee at the time, rather than plaintiff that later acquired the patent, 

was proper party to hypothetical negotiation); Nichols Inst. v. Scantibodies Clinical 

Lab., No. 3:02-cv-0046-B, ECF No. 808, at 7–10 (S.D. Cal. May 2, 2006) (same).

77. LaserDynamics, 694 F.3d at 75 (reasonable royalty determination must relate 

to the time infringement occurred and “not be an after-the-fact assessment” (citing 

Riles, 298 F.3d at 1313)); Powell v. Home Depot U.S.A., Inc., 663 F.3d 1221 (2011) 

(same).
I. Patent Damages in General

15

facts that predate the hypothetical negotiation. In “certain circumstances,” factual developments that occur after the hypothetical negotiation can inform the damages calculation.78 For 

example, “evidence of usage [of the infringing technology] after infringement started can, under appropriate circumstances, be helpful to the jury and the court in assessing 

whether a royalty is reasonable.”79 Usage (or similar) data 

may provide information the parties would have estimated 

during the negotiation.80 In certain circumstances, it may be 

appropriate to consider as part of the hypothetical negotiation other postnegotiation facts, namely license agreements 

entered into by the parties, profits earned by the infringer, 

and noninfringing alternatives. As explained in the following 

section, these facts may shed light on what the parties to the 

hypothetical negotiation would have thought in certain circumstances.

b. Calculating a Reasonable Royalty

The second step in a reasonable royalty analysis is to determine what royalty the parties to the hypothetical negotiation 

would have agreed upon as of the negotiation date. This requires determining both the form of royalty the parties would 

 

78. Sinclair Ref. Co. v. Jenkins Petroleum Process Co., 289 U.S. 689, 698 (1933) 

(postnegotiation evidence of the extent of use of the patented invention); Lucent, 580 

F.3d at 1333 (same); Fromson, 853 F.2d at 1575 (postnegotiation evidence of demand 

for the patented invention). This use of postnegotiation evidence of sales, demand, 

or use information is often referred to as the “book of wisdom,” harking back to the 

Supreme Court’s comments in Sinclair regarding contract damages for failure to assign a patent: “At times the only evidence available may be that supplied by testimony of experts as to the state of the art, the character of the improvement, and the 

probable increase of efficiency or saving of expense . . . . This will generally be the 

case if the trial follows quickly after the issue of the patent. But a different situation 

is presented if years have gone by before the evidence is offered. Experience is then 

available to correct uncertain prophecy. Here is a book of wisdom that courts may 

not neglect.” 289 U.S. at 698.

79. Lucent, 580 F.3d at 1333.

80. Id.
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16

have agreed upon—a single, lump-sum license payment versus a running royalty based on ongoing sales or usage, or perhaps another form—and the amount of the royalty payment.81

i. The form of reasonable royalty

A party seeking a reasonable royalty in the form of a single, 

lump-sum payment ordinarily may provide evidence of the expectations of the parties to the hypothetical negotiation concerning how often the patented technology would be used.82

The Federal Circuit has said that damages “ought to be correlated, in some respect, to the extent the infringing method is 

used by consumers. This is so because this is what the parties 

to the hypothetical negotiation would have considered.”83

This perhaps overstates the relevance of use, particularly 

where the value of the use of the patented invention is relatively small—for example, where the value is less than the 

cost of defending a patent infringement lawsuit, or where 

there is a history of licensing or sale at a relatively low 

amount.

Where a running royalty is sought, a “classic way” to calculate it is to multiply the royalty base (reflecting revenues 

generated as a result of the infringement) by the royalty rate 

 

81. See id. at 1325–27. Although Lucent recognized only the lump sum and running royalty forms, there are other possible arrangements.

82. Id. at 1327 (reversing $357 million lump-sum reasonable royalty damages 

award because, inter alia, “no evidence of record establishes the parties’ expectations about how often the patented method would be used by consumers”; patentee 

“submitted no evidence upon which a jury could reasonably conclude that [the parties to the hypothetical negotiation] would have estimated, at the time of the negotiation” that the patented feature “would have been so frequently used or valued as to 

command a lump-sum payment” of that magnitude). See also Interactive Pictures v. 

Infinite Pictures, 274 F.3d 1371, 1384–85 (2001) (accepting as suitable factual evidence the patentee’s “business plan and its projections for future sales” prepared 

“two months before infringement began”).

83. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1334 (Fed. Cir. 2009) (patentee has the “burden to prove that the extent to which the infringing method has 

been used supports the lump-sum damages award”); see also Asetek Danmark A/S v. 

CMI USA Inc., 842 F.3d 1350, 1360 (Fed. Cir. 2016).
I. Patent Damages in General

17

(a percentage of the royalty base).84 A running royalty also 

can be calculated as a fixed amount for each sale of an infringing product, sometimes referred to as a “per unit” royalty.85

The form of the payment, however, should not be selected 

arbitrarily, but according to evidence of the form upon which 

the parties to the negotiation would have agreed.86

ii. The amount of reasonable royalty

The reasonable royalty analysis may consider a wide range of 

evidence, and some of the factors to which that evidence may 

relate are referred to as the Georgia-Pacific factors.87 The first 

fourteen “factors” identified by the Georgia-Pacific court are: 

 

84. Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 27 (Fed. Cir. 2012). 

In WesternGeco L.L.C. v. ION Geophysical Corp., 791 F.3d 1340, 1349 n.9 (Fed. Cir. 

2015), the court rejected using the defendant’s customer’s revenues to calculate a 

reasonable royalty, relying on a paucity of cases “in which the plaintiff has used the 

defendant’s customer’s revenue as the revenue base for calculating a reasonable royalty.” 

85. See, e.g., Kearns v. Chrysler Corp., 32 F.3d 1541, 1544 (Fed. Cir. 1994) (awarding reasonable royalty of 90 cents per vehicle sold with the infringing windshield 

wipers, where average car price was approximately $4,000 to $6,000).

86. See Lucent, 580 F.3d at 1325 (“[W]e must decide whether substantial evidence supports this jury’s implicit finding that [the accused infringer] would have 

agreed to, at the time of the hypothetical negotiation, a lump-sum, paid-in-full royalty . . . .”). Experts will on occasion convert one form of agreement into another, for 

example, converting the amount of one of a party’s lump-sum agreements into the 

amount of running royalties where the hypothetically negotiated license agreement 

implements a running royalty structure. Although a running royalty can be converted 

into a lump sum by calculating the present value of the running royalty payments, 

and conversely a lump sum can be converted to a running royalty if the amount and 

timing of product sales to which the lump sum applies is known, these conversions 

involve not only the use of interest or discount rates to allow for the time value of 

money and the risk associated with the receipt of future royalty payments, but other 

factors, such as a party’s preference for the form of royalty, administrative convenience of the lump-sum form, etc. See id. at 1326 (identifying factors); Whitserve, 694 

F.3d at 27 (criticizing expert testimony for failing to explain how lump sum payments 

were converted to a running royalty).

87. See Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120–21 

(S.D.N.Y. 1970); WhitServe, 694 F.3d at 26–27 (Georgia-Pacific factors are “meant to 

provide a reasoned economic framework” for a hypothetical negotiation); Energy 

Transp. Grp., Inc. v. William Demant Holding A/S, 697 F.3d 1342, 1357 (Fed. Cir. 2012) 

(“[T]his court does not endorse Georgia-Pacific as setting forth a test for royalty calculations, but only as a list of admissible factors informing a reliable economic analysis.”); Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011) (“This 
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

18

1. The royalties received by the patentee for the licensing 

of the patent in suit, proving or tending to prove an established royalty. 

2. The rates paid by the licensee for the use of other patents 

comparable to the patent in suit. 

3. The nature and scope of the license, as exclusive or nonexclusive; or as restricted or non-restricted in terms of territory or with respect to whom the manufactured product 

may be sold. 

4. The licensor’s established policy and marketing program 

to maintain his patent monopoly by not licensing others to 

use the invention or by granting licenses under special conditions designed to preserve that monopoly. 

5. The commercial relationship between the licensor and licensee, such as, whether they are competitors in the same 

territory in the same line of business; or whether they are 

inventor and promoter. 

6. The effect of selling the patented specialty in promoting

sales of other products of the licensee; the existing value of 

the invention to the licensor as a generator of sales of his 

non-patented items; and the extent of such derivative or 

convoyed sales. 

7. The duration of the patent and the term of the license. 

8. The established profitability of the product made under 

the patent; its commercial success; and it current popularity. 

9. The utility and advantages of the patent property over 

the old modes or devices, if any, that had been used for 

working out similar results. 

10. The nature of the patented invention; the character of 

the commercial embodiment of it as owned and produced 

 

court has sanctioned the use of the Georgia-Pacific factors to frame the reasonable 

royalty inquiry. Those factors properly tie the reasonable royalty calculation to the 

facts of the hypothetical negotiation at issue.”); ResQNet.com, Inc. v. Lansa, Inc., 594 

F.3d 860, 869 (Fed. Cir. 2010) (Georgia-Pacific factors are a “comprehensive (but unprioritized and often overlapping) list of relevant factors for a reasonable royalty 

calculation”).
I. Patent Damages in General

19

by the licensor; and the benefits to those who have used the 

invention. 

11. The extent to which the infringer has made use of the 

invention; and any evidence probative of the value of that 

use. 

12. The portion of the profit or of the selling price that may 

be customary in the particular business or in comparable 

businesses to allow for the use of the invention or analogous inventions. 

13. The portion of the realizable profit that should be credited to the invention as distinguished from non-patented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer. 

14. The opinion testimony of qualified experts.

The court compiled these fourteen evidentiary factors (plus a 

fifteenth “factor” that effectively restates the analytical framework88) from a “conspectus of the leading cases” described as 

“seemingly more pertinent” to the issue.89 The fifteen factors, 

 

88. The fifteenth and final factor identified by the Georgia-Pacific district court 

is “The amount that a licensor (such as the patentee) and a licensee (such as the 

infringer) would have agreed upon (at the time the infringement began) if both had 

been reasonably and voluntarily trying to reach an agreement; that is, the amount 

which a prudent licensee—who desired, as a business proposition, to obtain a license to manufacture and sell a particular article embodying the patented invention—would have been willing to pay as a royalty and yet be able to make reasonable 

profit and which amount would have been acceptable by a prudent patentee who 

was willing to grant a license.” 318 F. Supp. at 1120. The Federal Circuit has restated 

this “willing licensor–willing licensee” approach as attempting “to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an 

agreement just before infringement began,” recognizing that “[t]he hypothetical negotiation tries, as best as possible, to recreate the ex ante licensing negotiation scenario and to describe the resulting agreement,” noting that “if infringement had not 

occurred, willing parties would have executed a license agreement specifying a certain royalty payment scheme,” and that “[t]he hypothetical negotiation also assumes 

that the asserted patent claims are valid and infringed.” Lucent, 580 F.3d at 1324–25.

89. Georgia-Pacific, 318 F. Supp. at 1120. The Federal Circuit has taken the liberty 

of revising these factors to more closely align with developments in damages law 

under its watch. For example, in i4i Ltd. P’ship v. Microsoft Corp., 589 F.3d 1246, 1268 

n.3 (Fed. Cir. 2009), the Federal Circuit described the Georgia-Pacific factors as 

“(1) royalties the patentee has received for licensing the patent to others; (2) rates 

paid by the licensee for the use of comparable patents; (3) the nature and scope of 
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

20

however, are not exclusive.90 Moreover, there is “no formula by 

which these factors can be rated precisely in the order of their 

relative importance or by which their economic significance 

can be automatically transduced into their pecuniary equivalent.”91 In applying the Georgia-Pacific factors, the parties are 

presumed to have had full knowledge of the facts and circumstances surrounding the infringement at the time of the negotiation.92

Although the Georgia-Pacific framework is the method 

most commonly used to analyze reasonable royalty damages, 

parties are not required to use “any or all” of the Georgia-Pacific factors.93 If they choose to use them, however, they must 

fully analyze the applicable factors, rather than superficially 

 

the license (exclusive or nonexclusive, restricted or non-restricted by territory or 

product type); (4) any established policies or marketing programs by the licensor to 

maintain its patent monopoly by not licensing others to use the invention or granting 

licenses under special conditions to maintain the monopoly; (5) the commercial relationship between the licensor and licensee, such as whether they are competitors; 

(6) the effect of selling the patented specialty in promoting sales of other products 

of the licensee; (7) the duration of the patent and license term; (8) the established 

profitability of the product made under the patent, including its commercial success 

and current popularity; (9) the utility and advantages of the patent property over old 

modes or devices; (10) the nature of the patented invention and the benefits to those 

who have used the invention; (11) the extent to which the infringer has used the 

invention and the value of that use; (12) the portion of profit or of the selling price 

that may be customary in that particular business to allow for use of the invention 

or analogous inventions; (13) the portion of the realizable profit that should be credited to the invention as opposed to its non-patented elements; (14) the opinion testimony of qualified experts; and (15) the results of a hypothetical negotiation between the licensor and licensee.”

90. Integra Life Sciences I, Ltd. v. Merck KgaA, 331 F.3d 860, 871–72 (Fed. Cir. 

2003).

91. Georgia-Pacific, 318 F. Supp. at 1121.

92. LaserDynamics, Inc. v. Quanta Computers, Inc., 694 F.3d 51, 76 (Fed. Cir. 

2012). This principle—that the parties to the hypothetical negotiation are presumed 

to have known of the patent and the infringement at the time of the negotiation—is 

sometimes misinterpreted to mean that a trier of fact can properly consider all postnegotiation facts and developments under the “book of wisdom” doctrine. That is 

not the case. See the “book of wisdom” discussion above, note 78.

93. WhitServe, 694 F.3d at 31. The Supreme Court has explained in the real property context that the willing buyer–willing seller approach “is not an absolute standard nor an exclusive method of valuation.” United States v. Virginia Elec. & Power 

Co., 365 U.S. 624, 633 (1961). 
I. Patent Damages in General

21

reciting all fifteen.94 Moreover, “while mathematical precision 

is not required, some explanation of both why and generally 

to what extent the particular factor impacts the royalty calculation is needed.”95

Other factors not enumerated in Georgia-Pacific may be 

relevant to the royalty determination. For example, the cumulative effect of “stacking royalties”—the number of patent licenses required to produce the accused product—may color 

the character of a hypothetical negotiation.96 Where the patent-in-suit was transferred (along with products, other patents and know-how, or other assets) as part of a business 

acquisition, the overall acquisition price may be relevant in 

assessing the value of a license to the patent.97

The accused infringer’s evidence of an available, acceptable, noninfringing alternative to the infringing technology, or 

“design-around,” should be considered in the hypothetical 

negotiation,98 but the cost of such an alternative does not necessarily cap the reasonable royalty.99 When an infringer can 

 

94. WhitServe, 694 F.3d at 31

95. Id. (rejecting “bare-bones Georgia-Pacific analysis” that consisted of a cursory recitation of the factors, followed by conclusory remarks that each factor would 

cause an upward or downward adjustment to, or have a neutral impact on, the hypothetically negotiated royalty rate).

96. Integra, 331 F.3d at 871–72.

97. Id.

98. See Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1312 (Fed. Cir. 2002) 

(“[U]nder the constraints of the hypothetical negotiation, the market could not 

award [the patentee] a royalty for his method divorced of all relation to a potential 

non-infringing alternative method. The economic relationship between the patented 

method and non-infringing alternative methods, of necessity, would limit the hypothetical negotiation.”) (citing Grain Processing Corp. v. Am. Maize-Prods. Co., 185 

F.3d 1341, 1347 (Fed. Cir. 1999)); Zygo Corp. v. Wyko Corp., 79 F.3d 1563, 1571–72 

(Fed. Cir. 1996) (remanding damages award for district court to “reconsider its award 

of a 25% royalty rate in light of [infringer’s] ability to market the noninfringing [product] in lieu of marketing the infringing [product]”). A similar approach is basing a 

reasonable royalty on the costs avoided by infringing. See Prism Techs. LLC v. Sprint 

Spectrum L.P., 849 F.3d 1360, 1375–76 (Fed. Cir. 2017).

99. Reasonable royalty damages are not capped, as a matter of law, at “the cost 

of implementing the cheapest available, acceptable, non-infringing alternative” because there may be reasons beside cost that prevent the infringer from switching to 

the alternative. Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1373 (Fed. Cir. 2008). 
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

22

easily design around a patent, the hypothetical royalty is typically low; by the same reasoning, if avoiding the patent would 

be difficult, expensive, and time-consuming, the hypothetical 

royalty would likely be greater.100 Even where the infringer did 

not have a noninfringing alternative in hand but had the resources to come up with one at the time of the negotiation, 

the fact finder may consider that fact in setting a royalty 

rate.101 Merely because an infringer implemented a noninfringing alternative at some point after the hypothetical negotiation date is not enough, however; the alternative must have 

been available to the infringer and acceptable to customers 

at the relevant time.102 At times, there will be evidence about 

the availability and acceptability of noninfringing alternatives 

contemporaneous with the hypothetical negotiation,103 but 

when there is no such evidence, courts have looked to ex post 

evidence that sheds light on the availability and acceptability 

of a noninfringing alternative at the time of the hypothetical 

negotiation.104

 

100. AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1334–35 (Fed. Cir. 2015). 

The infringer “would have been in a stronger position to negotiate for a lower royalty 

rate knowing it had a competitive noninfringing device ‘in the wings.’” Id.

101. See Mars, 527 F.3d at 1373.

102. See, e.g., Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1346 (Fed. Cir. 

2011) (affirming jury verdict of 5% royalty despite evidence of noninfringing alternative where district court’s finding that “a reasonable jury could have found that the 

alleged alternatives were either not acceptable or not available” was supported by 

substantial evidence); Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1393–94 (Fed. 

Cir. 2003) (affirming jury verdict based on lack of evidence that noninfringing alternative implemented three years after the hypothetical negotiation was available to 

infringer and acceptable to consumers at the hypothetical negotiation). If the alternative would not have been available at the time of the hypothetical negotiation, or 

would have taken considerable time to implement, the analysis should consider the 

infringer’s cost of delayed market entry. 

103. See, e.g., Riles, 298 F.3d at 1313 (remanding for trial court to entertain additional evidence in light of “conflicting” evidence on availability of noninfringing alternative).

104. For example, in TWM, the Federal Circuit affirmed the district court’s rejection of the infringer’s argued existence of a noninfringing alternative based on consideration of the infringer’s “failure to design its own device,” “election to infringe, 

despite having expended only minimal sums when notified of infringement,” “willful 

infringement,” “failure to successfully market other allegedly ‘acceptable’ designs,” 
I. Patent Damages in General

23

A fundamental premise of the hypothetical negotiation 

form of reasonable royalty analysis is that the suppositious 

licensee would be left with some anticipated profit after paying the royalty.105 The Georgia-Pacific trial court identified the 

“anticipated amount of net profits that the prospective licensee reasonably thinks he will make” as one of the factors that 

parties to a hypothetical negotiation may consider,106 but on 

appeal the Second Circuit made clear that the suppositious 

licensee’s expected profit should be seen as a limitation on 

the reasonable royalty—a royalty should always be fixed “so 

as to leave the infringer, or supposititious licensee, a reasonable profit,” and explicitly rejected as “basic error” the computation of a royalty rate that “did not allow [the supposititious licensee] a reasonable profit after paying the supposititious royalty.”107 The Federal Circuit has similarly recognized 

that “[an expert]’s opinion that [a supposititious licensee] 

would agree to pay a royalty in excess of what it expected to 

make in profit was . . . absurd.”108 A suppositious licensee sitting at the hypothetical negotiating table would expect to 

 

violation of an injunction, and “withdrawal from the business after enforcement of 

the injunction.” TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 900 (Fed. Cir. 1986); see 

also, AstraZeneca, 782 F.3d at 1340–41 (finding that noninfringing alternatives were 

not available at the time of infringement because the only noninfringing alternative 

available was covered by third-party patents and other alternatives were found to be 

noninfringing at a much later time).

105. See Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1081 (Fed. Cir. 

1983) (“[T]hat a reasonable royalty would leave an infringer with a reasonable profit 

. . . is implicit . . . .”) (internal quotation marks omitted). Although, economically 

speaking, exceptional circumstances exist where the infringer’s anticipated profit 

flowing directly from infringing sales may not represent a reasonable cap, such as a 

loss leader, those circumstances should be considered from the broad perspective 

of benefit to the infringer, not just benefit from the infringing sales, if those benefits 

can be quantified.

106. Georgia-Pacific, 318 F. Supp. at 1121.

107. Georgia-Pacific Corp. v. U.S. Plywood-Champion Papers, Inc., 446 F.2d 295, 

299 (2d Cir. 1971).

108. Lindemann Maschinenfabrik GmbH v. Am. Hoist & Derrick Co., 895 F.2d 

1403, 1408 (Fed. Cir. 1990). See also Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd.,

807 F.3d 1283, 1304 (Fed. Cir. 2015) (“A key inquiry in the [reasonable royalty] analysis is what it would have been worth to the defendant, as it saw things at the time, to 

obtain the authority to use the patented technology considering the benefits it would 
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

24

make a profit from its anticipated use of the patented invention. In other words, “a reasonable royalty would leave an infringer with a reasonable profit,” at least based on its expectations, if they can be proven.109 As evidence of the profits the 

accused infringer at the hypothetical negotiation table would 

have expected to make from using the invention, actual profits are like evidence of postnegotiation license agreements, in 

that the relevance of the infringer’s actual profits depends on 

whether the circumstances under which those profits were 

made were comparable to what the negotiation party would 

have anticipated or expected.110 That an infringer actually 

made unexpectedly low profits, or even lost money, from its 

infringing use may have little or no relevance, and a reasonable royalty may exceed the infringer’s actual profit.111

 

expect to receive from using the technology” and “a basic premise of the hypothetical negotiation is the opportunity for making substantial profits if the two sides [are] 

willing to join forces by arriving at a license of the technology.” (internal quotation 

marks omitted)). Likewise, “a patent owner participating in a hypothetical negotiation would consider the profits on sales it might lose as a result of granting a license.” 

Asetek Danmark A/S v. CMI USA Inc., 842 F.3d 1350, 1360 (Fed. Cir. 2016) (citing RiteHite Corp. v. Kelley Co., 56 F.3d 1538, 1544–56 (Fed. Cir. 1995)).

109. Hanson, 718 F.2d at 1081 (“The issue of the infringer’s profit is to be determined not on the basis of hindsight evaluation of what actually happened, but on the 

basis of what the parties to the hypothetical license negotiations would have considered at the time of the negotiations.”).

110. Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 771–72 (Fed. Cir. 2014).

111. See id. (district court “erred in treating the profits [accused infringer] actually earned during the period of infringement as a royalty cap” because accused 

infringer “could have raised its prices (over what it actually charged for infringing 

sales) to account (fully or partly) for a royalty payment”); Douglas Dynamics, LLC v. 

Buyers Prods. Co., 717 F.3d 1336, 1346 (Fed. Cir. 2013) (“The infringer’s selling price 

can be raised if necessary to accommodate a higher royalty rate, and indeed, requiring the infringer to do so may be the only way to adequately compensate the patentee for the use of its technology.”); Radio Steel & Mfg. Co. v. MTD Prods., Inc., 788 

F.2d 1554, 1557 (Fed. Cir. 1986) (affirming royalty that exceeded the infringer’s profits 

where infringer’s treasurer testified infringing products “might have been utilized as 

loss-leaders at various times during the period of infringement”); Hanson, 718 F.2d at 

1081 (“Whether, as events unfurled thereafter, [infringer] would have made an actual 

profit, while paying the royalty determined as of [the hypothetical negotiation date], 

is irrelevant.”). In Powell v. Home Depot U.S.A., Inc., 663 F.3d 1221, 1238–39 (2011), 

the dicta rejecting the infringer’s profit expectation as a limit on the reasonable royalty relied solely on the irrelevant holding of Stickle v. Heublien, Inc., 716 F.2d 1550, 

1563 (Fed. Cir. 1983), “rejecting the accused infringer’s argument that the reasonable 
I. Patent Damages in General

25

Witnesses testifying to the amount of a reasonable royalty 

often seek to use other license agreements as evidence of 

what the parties to the hypothetical negotiation would have 

agreed upon.112 Other license agreements may be relevant to 

the hypothetical negotiation if they are “sufficiently comparable to the hypothetical license at issue,” because they can 

provide inferential evidence of how the parties to the hypothetical negotiation would have valued the patent-in-suit at 

the time of the negotiation, particularly the party that entered 

into that license.113 Thus, whether such license agreements 

are relevant and admissible depends on the specifics of the 

licenses: they must be for sufficiently comparable technology, and they must have been entered into under economic 

or other circumstances that are sufficiently comparable to 

the hypothetical negotiation that the license can fairly be said 

to yield relevant inferences about how the parties would have 

valued the patented technology at issue.114 Actual licenses to 

 

royalty is capped by the sales prices of the patented product.” Powell, 663 F.3d at 

1239.

112. For example, Georgia-Pacific factor 2 is “[t]he rates paid by the licensee for 

the use of other patents comparable to the patent in suit.” Georgia-Pacific Corp. v. 

U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). Subsumed within this 

factor is the question of the structure of the license—that is, “whether the licensor 

and license would have agreed on a lump-sum payment or instead to a running royalty based on ongoing sales or usage.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 

1301, 1326 (Fed. Cir. 2009).

113. See, e.g., LaserDynamics, Inc. v. Quanta Computers, Inc., 694 F.3d 51, 79, 80

(Fed. Cir. 2012) (“Actual licenses to the patent-in-suit are probative not only of the 

proper amount of a reasonable royalty, but also of the proper form of the royalty 

structure.”); Lucent, 580 F.3d at 1325–26 (quoting Russell L. Parr, Royalty Rates for 

Licensing Intellectual Property 64 (2007) (“For similar license agreements to be used 

as a proxy for derivation of a fair market royalty, the form of license compensation 

should be on a like-kind basis.”)).

114. See, e.g., Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 

2011) (“[T]here must be a basis in fact to associate the royalty rates used in prior 

licenses to the particular hypothetical negotiation at issue in the case.”); see also

Lucent, 580 F.3d at 1325, 1330; ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 870–72 

(Fed. Cir. 2010). The Federal Circuit has cautioned that courts must “exercise vigilance when considering past licenses to technologies other than the patent in suit.” 

ResQNet, 594 F.3d at 869 (citing Lucent, 580 F.3d at 1329). And “royalties paid by re-
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

26

the patented technology at issue are likely the most probative, as they “most clearly reflect the economic value of the 

patented technology in the marketplace.”115 Licenses to other 

technology may be useful, but a party seeking to rely on them 

bears the burden of showing that they are sufficiently comparable to the hypothetical license being negotiated and must 

account for any economic or technological differences between them and the hypothetical license.116 License agreements that are “vastly different” from the hypothetical license—for example, because they cover an entire patent 

portfolio instead of just the patent (or patents) in suit, because they license not only the patents in suit but other types 

of intellectual property, or because they cover different technology—cannot properly inform the damages analysis.117

Likewise, reliance on “industry licenses” does not establish 

comparability.118

When evaluating the comparability of other licenses offered as part of a reasonable royalty analysis, the timing of 

the execution of the agreements matters in at least two ways. 

First, the closer in time the other licenses are to the hypothetical negotiation date, whether before or after, the more likely 

it will be that those licenses were entered into under eco-

 

lated parties have little probative value as to the patent’s value.” Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1377 (Fed. Cir. 2015); see also Allen Archery, 

Inc. v. Browning Mfg. Co., 898 F.2d 787, 790 (Fed. Cir. 1990).

115. LaserDynamics, 694 F.3d at 79, 80 (“Actual licenses to the patent-in-suit are 

probative not only of the proper amount of a reasonable royalty, but also of the 

proper form of the royalty structure.”).

116. See, e.g., Uniloc, 632 F.3d at 1317; Lucent, 580 F.3d at 1325, 1330; ResQNet, 

594 F.3d at 870–72; Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1211–11

(Fed. Cir. 2010). 

117. Lucent, 580 F.3d at 1327–28 (license agreements for other groups of patents 

“were created from events far different from a license negotiation to avoid infringement of the one patent here”); LaserDynamics, 694 F.3d at 79 (“alleging a loose or 

vague comparability between different technologies or licenses does not suffice”); 

see also ResQNet, 594 F.3d at 870, 872.

118. Lucent, 580 F.3d at 1328 (patentee “characterizes the four [other license] 

agreements as covering ‘PC-related patents,’ as if personal computer kinship imparts 

enough comparability to support the damages award”).
I. Patent Damages in General

27

nomic or other circumstances that are sufficiently comparable to those surrounding the hypothetical negotiation to reflect the view of one or both of the parties to the hypothetical 

negotiation of the value of the hypothetical license. The effect 

of timing on comparability may depend upon the rate of technological change in the relevant market. Second, for settlement of litigation, settlement licenses, negotiated after the determination of infringement and validity, can be relevant as 

they have taken place in a setting “similar to the setting of a 

hypothetical negotiation in which infringement and patent validity are assumed.”119

Furthermore, the form of the requested hypothetical royalty and the form of the proposed “comparables” are also important. There are “fundamental differences” between lumpsum license agreements and running-royalty agreements.120

Thus, although it is possible for a running royalty agreement

to be relevant to a lump-sum damages award (and vice versa), 

there must be a factual basis for comparing the two and recalculating “in a meaningful way” the value of the running royalty licenses to arrive at the hypothetical lump-sum license 

amount.121 Even when comparing existing lump-sum licenses 

to a hypothetical lump-sum license, there must be a factual 

basis for comparison.122

That said, there may be circumstances when admittedly 

noncomparable licenses are relevant and admissible for limited purposes. For example, a party may wish to offer existing 

license agreements that are not comparable to the hypothetical license (because, for example, they “cover many patents 

 

119. AstraZeneca, 782 F.3d at 1336–37.

120. Lucent, 580 F.3d at 1330.

121. Id.

122. Wordtech Sys., Inc. v. Integrated Networks Solutions, Inc., 609 F.3d 1308, 

1320 (Fed. Cir. 2010) (without data on how existing lump-sum licenses were calculated—such as what the intended products were and how many products each licensee expected to produce under the lump-sum license—other lump-sum licenses provide no basis for comparison and amount to “little more than a recitation of royalty 

numbers” (quoting Lucent, 580 F.3d at 1329)).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

28

at a lower rate” than the other party proposes) precisely because they are not comparable and arguably show that the 

requested royalty is unreasonably high.123 Faced with a request to introduce noncomparable licenses, the court should 

carefully consider the proffered reason for introducing them, 

and where it concludes they appropriately can be admitted, 

properly limit their use.

A related issue is whether settlement licenses can be relevant to the reasonable royalty inquiry. The Federal Circuit 

has acknowledged that there may be instances where the 

most comparable license agreements have been entered into 

to settle litigation.124 While it could be said that many if not 

most patent license agreements are entered into because of 

at least the implicit threat of litigation conveyed by the patent, courts nonetheless should exercise care in considering 

license agreements entered into to settle ongoing or explicitly 

threatened litigation in order to ensure the agreements provide information that would have been considered by the participants in the hypothetical negotiation—that is, that they 

truly are comparable, and that their value is adjusted to compensate for litigation effects.125 Similarly, in some circumstances, proposed (but not consummated) licenses may have 

 

123. See LaserDynamics Inc. v. Quanta Computer, Inc., No. 2:06-cv-348, ECF No. 

785 at 1 (E.D. Tex. Jan. 30, 2011).

124. ResQNet, 594 F.3d at 872 (“[T]he most reliable license in this record arose 

out of litigation.”). Because settlement agreements are subject to exclusion for lack 

of comparability and relevant adjustment, parties often present an alternative analysis along with one based on settlement agreements. 

125. See id. at 872 (“the hypothetical reasonable royalty calculation occurs before litigation” and “litigation itself can skew the results of the hypothetical negotiation”); LaserDynamics, Inc. v. Quanta Computers, Inc., 694 F.3d 51, 77 (Fed. Cir. 2012)

(“The propriety of using prior settlement agreements to prove the amount of a reasonable royalty is questionable”; a district court must consider such licenses in their

“proper context within the hypothetical negotiation framework to ensure that the 

reasonable royalty rate reflects ‘the economic demand for the claimed technology.’”

(quoting ResQNet, 594 F.3d at 872)); but see Prism Techs. LLC v. Sprint Spectrum L.P., 

849 F.3d 1360, 1370 (Fed. Cir. 2017) (“The particulars of a case that was settled and 

the settlement, as well as the case in which the settlement is offered as evidence, 

matter to the Rule 403 balance.”).
I. Patent Damages in General

29

some value for determining a reasonable royalty, but their evidentiary value is narrowly limited because, among other reasons, “patentees could artificially inflate the royalty rate by 

making outrageous offers.”126 Care should be taken in evaluating damages testimony that relies on offers to license.

It is important to distinguish the date of the hypothetical 

negotiation from other dates that affect infringement damages liability.127 For example, the statutory six-year limitation 

on recovery of past damages does not preclude the hypothetical negotiation date from taking place earlier, when infringement began, “even if damages cannot be collected until sometime later.”128 Likewise, failure to mark a patented product or 

prove actual notice of the patent precludes a patentee from 

recovering damages for the period prior to marking or notice, 

“but the hypothetical negotiation date may nevertheless be 

properly set before marking or notice occurs.”129

c. Apportionment

Damages awarded for patent infringement “must reflect the 

value attributable to the infringing features of the product, 

and no more.”130 “This principle—apportionment—is the governing rule where multi-component products are involved.”131

The requirement for apportionment dates back to at least Garretson v. Clark,

132 where the Supreme Court explained:

 

126. Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 29–30 (Fed. Cir. 

2012) (expert’s testimony regarding a proposed, but unaccepted, license cannot support jury verdict “because it is based on fiction” and contradicts expert’s other testimony). See also NetAirus Techs., LLC v. Apple Inc., No. 10-cv-3257, ECF No. 533, at 

69 (C.D. Cal. Oct. 23, 2013) (rejecting damages expert’s reliance on unaccepted litigation settlement offers).

127. LaserDynamics, 694 F.3d at 75. 

128. Id. See 35 U.S.C. § 286.

129. LaserDynamics, 694 F.3d at 75. See 35 U.S.C. § 287.

130. Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014).

131. Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc. (“CSIRO”), 

809 F.3d 1295, 1301 (Fed. Cir. 2015).

132. 111 U.S. 120, 121 (1884).
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30

The patentee . . . must in every case give evidence tending 

to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features, and such evidence must be reliable and 

tangible, and not conjectural or speculative; or he must 

show, by equally reliable and satisfactory evidence, that the 

profits and damages are to be calculated on the whole machine, for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature.

In view of the apportionment requirement, “all expert 

damages opinions must separate the value of the allegedly infringing features from the value of all other features.”133 Thus, 

the “essential requirement” for reliability “is that the ultimate 

reasonable royalty award must be based on the incremental 

value that the patented invention adds to the end product,”134

i.e., the value apportioned to the patented features.

The Federal Circuit has “developed certain principles to 

aid courts in determining when an expert’s apportionment 

model is reliable.”135 One such principle—the smallest salable 

patent-practicing unit principle—provides that a patentee 

should use no more than the smallest salable patent practicing unit of an accused multicomponent product as the royalty 

base.136 Where the smallest salable patent-practicing unit itself contains both patented and unpatented features or components, further apportionment may be necessary to ensure 

that the damages compensate only for the contribution and 

value of the patented invention.137 The damages must be cali-

 

133. CSIRO, 809 F.3d at 1301 (citing VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 

1329 (Fed. Cir. 2014)).

134. Ericsson, 773 F.3d at 1226.

135. CSIRO, 809 F.3d at 1301.

136. See LaserDynamics, 694 F.3d at 67; Versata Software Inc. v. SAP Am., Inc., 

717 F.3d 1255, 1268 (Fed. Cir. 2013).

137. See VirnetX, 767 F.3d at 1327 (“[T]he requirement that a patentee identify 

damages associated with the smallest salable patent-practicing unit is simply a step 

towards meeting the requirement of apportionment. Where the smallest salable unit 

is, in fact, a multi-component product containing several non-infringing features with 
I. Patent Damages in General

31

brated to compensate only for the infringer’s use of the patented invention. Apportioning patent infringement damages 

ensures that patentees are compensated only for the value of 

what they invented.138 Apportionment cannot be based on arbitrary rules of thumb or other arbitrary assumptions.139 Rather, a court “must carefully tie proof of damages to the 

claimed invention’s footprint in the market place.”140 A damages calculation that is not based on the value of the claimed 

invention “punishes beyond the reach of the [patent damages] statute.”141

A formulation known as the entire market value rule 

(“EMV rule” or “EMVR”) exists as a “narrow exception” to the 

 

no relation to the patented feature . . . , the patentee must do more to estimate what 

portion of the value of that product is attributable to the patented technology.”);

LaserDynamics, 694 F.3d at 70 (purpose of entire market value rule is to ensure that 

the royalty base “does not overreach and encompass components not covered by 

the patent”).

138. Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011) (the 

patentee “must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the 

unpatented features, and such evidence must be reliable and tangible, and not conjectural or speculative” (quoting Garretson, 111 U.S. at 121)); Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1312 (Fed. Cir. 2002) (“[T]he market would pay [the 

patentee] only for his product . . . . [The patentee’s damages] model [does not support the jury’s damages award because it] does not associate [the] proposed royalty 

with the value of the patented method at all, but with the unrelated cost of the entire . . . platform.”).

139. See VirnetX, 767 F.3d at 1032–34 (rejecting application of a 50% rule of 

thumb under the guise of the “Nash Bargaining Solution” because it was insufficiently 

tied to the facts of the case); Uniloc, 632 F.3d at 1318 (rejecting damages 25% rule of 

thumb as “arbitrary, unreliable and irrelevant”); Douglas Dynamics, LLC v. Buyers 

Prods. Co., 717 F.3d 1336, 1346 (Fed. Cir. 2013) (district court abuses its discretion 

by applying “the infamous 25% rule of thumb”). Courts should scrutinize damages 

calculations that use similarly arbitrary approaches, such as testimony that the parties to the hypothetical negotiation simply would “split the difference” or “meet in 

the middle” between their respective negotiating positions. Unless that testimony is 

based on facts carefully tied to the particular parties—such as evidence that this is 

their normal negotiating strategy—it would be just as “arbitrary, unreliable and irrelevant” as the 25% rule of thumb rejected by the Federal Circuit in Uniloc. See also

LaserDynamics, Inc. v. Quanta Computers, Inc., 694 F.3d 51, 69 (Fed. Cir. 2012).

140. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010).

141. Id.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

32

apportionment requirement.142 The EMV rule most frequently 

arises in deciding whether the royalty base to which a royalty 

rate will be applied should be the entire value of the infringing 

product or some portion thereof to allow for the presence of 

unpatented components.143 In the context of lost profits, the 

EMV rule usually arises in assessing whether noninfringing 

products sold with the infringing product may be included in 

the damages base. The EMV rule allows a patentee to assess 

damages based on the entire market value if (1) the infringing 

product or component is the basis for customer demand for 

the unpatented product or the entire infringing product, 

(2) the infringing and noninfringing products or components 

are sold together so they constitute a functional unit or are 

parts of a complete machine or single assembly of parts, and 

(3) the infringing and noninfringing products or components 

are analogous to a single functioning unit.144

The first requirement—that “the patented feature creates 

the ‘basis for customer demand’ or ‘substantially create[s] 

 

142. CSIRO, 809 F.3d at 1302.

143. The Federal Circuit has underscored that a patentee may not avoid satisfying the requirements of the EMV rule simply by using a low royalty rate. LaserDynamics, 694 F.3d at 68 (“[T]he requirement to prove that the patented feature drives demand for the entire product may not be avoided by the use of a very small royalty 

rate.”); Uniloc, 632 F.3d at 1320 (“The Supreme Court and this court’s precedents do 

not allow consideration of the entire market value of accused products for minor 

patent improvements simply by asserting a low enough royalty rate.”).

144. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549–50 (Fed. Cir. 1995). The EMV 

rule “limit[s] the permissible scope of patentees’ damages theories” and “acts as a 

check” to ensure that royalty damages are reasonable “in light of the technology at 

issue.” LaserDynamics, 694 F.3d at 67. The EMV rule does not apply, however, where 

the patent claims cover the entire accused product, the accused product contains 

“no unpatented or non-infringing feature,” and the combination substantially creates 

the value of the entire product. AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1338–

39 (Fed. Cir. 2015). The entire market value rule is not an exercise in subtracting prior 

art elements from the asserted patent claim. Id. “Notably, these requirements are 

additive, not alternative ways to demonstrate eligibility for application of the entire 

market value rule.” Cornell Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d 279, 286–87 

(N.D.N.Y. 2009) (Rader, J., sitting by designation).
I. Patent Damages in General

33

the value of the component parts’”—is the one most frequently addressed in the case law.145 It is not enough to show 

that the patented feature or component is valuable, important, or even essential to the use or commercial viability 

of the accused product.146 The evidence must show that the 

patented feature alone drives consumer demand for the product or “substantially creates the value of the entire product,” 

such that the value of the entire product is fairly attributable 

to the allegedly infringed technology.147

Market studies and consumer surveys are two ways a patentee might seek to show what drives demand for the accused product.148 However, the testimony and opinions of survey experts also must satisfy Rule 702’s requirements: the 

surveys must be based on scientifically valid reasoning or 

methodology that is properly applied to the facts of the case. 

Surveys that purport to measure the value or importance of 

features that go beyond what is covered by the patents-in-suit 

do not meet this test.149

Where the patentee cannot show that the entire market 

value rule applies and cannot apportion its damages, it still 

might be able to seek reasonable royalty damages based on 

 

145. See, e.g., Uniloc, 632 F.3d at 1318 (citing Lucent Techs., Inc. v. Gateway, Inc., 

580 F.3d 1301, 1336 (Fed. Cir. 2009) and Rite-Hite, 56 F.3d at 1549–50)); LaserDynamics, 

694 F.3d at 66–70.

146. LaserDynamics, 694 F.3d at 68 (“[P]roof that consumers would not want a 

laptop computer without [the patented features] is not tantamount to proof that any 

one of those features alone drives the market for laptop computers.”).

147. Id. at 68, 69 (to use the EMV rule, the entire value of the accused product 

must be attributable to the patented feature (citing Garretson, 111 U.S. at 121)); AstraZeneca, 782 F.3d at 1338–39.

148. LaserDynamics, 694 F.3d at 69.

149. See Fed. R. Evid. 702; see also generally Patent Management Guide, supra

note 2, at 7-37 to 7-39; see also Fractus, S.A. v. Samsung Elecs. Co., Ltd., No. 6:2009-

cv-00203, ECF No. 896, at 2 (E.D. Tex. Apr. 29, 2011) (excluding consumer surveys 

that measured the value or importance of features that are broader than the claimed 

invention; such surveys “do not measure how consumers value the purported advantages provided by [the patented] technology”); NetAirus, No. 10-cv-3257, ECF No. 

524, at 4–6 (excluding survey results as unreliable, e.g., for eliciting answers from 

respondents who had no basis to provide them, seeking to value features beyond 

those covered by the asserted claims, and asking value-related questions without 

sufficient factual basis).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

34

something other than a percentage of sales revenue or profit, 

for example, a lump-sum royalty or a per-unit royalty.150 This 

alternate form of royalty, however, may still require apportionment.

Where a patentee cannot satisfy the EMV rule, it may be 

improper and prejudicial to permit the patentee to put the 

accused infringer’s total revenues from the accused products 

before the jury for some other reason. For example, where the 

EMV rule is not satisfied, an expert may not use the infringer’s 

total revenues as a purported “reasonableness check.”151

Such evidence “cannot help but skew the damages horizon 

for the jury, regardless of the contribution of the patented 

component to this revenue.”152 A court should carefully evaluate any effort (and proffered rationale) to put evidence of 

the entire revenues associated with the accused products before the jury.153

The court should not permit a party to circumvent the apportionment requirement by relying on broad “apparatus” 

claim language when, in fact, the patented invention is not an 

 

150. See LaserDynamics, 694 F.3d at 70 (patentee’s argument that “practical and 

economic necessity” compelled use of entire market value of a multicomponent 

product overlooks that a percentage running royalty “is not the only form of a reasonable royalty that the parties might have agreed to in a hypothetical negotiation”); 

SynQor Inc. v. Artesyn Techs., Inc., 709 F.3d 1365, 1383 (Fed. Cir. 2013) (requirements 

of EMV rule inapplicable where patentee “never sought to justify its damages figure 

based on the price of the customer end products”).

151. Uniloc, 632 F.3d at 1319–20 (“[T]he fact that the entire market value was 

brought in as only a ‘check’ is of no moment.”).

152. Id. at 1320. See also LaserDynamics, 694 F.3d at 68 (“[O]ne way in which the 

error of an improperly admitted entire market value theory manifests itself is in the 

disclosure of the revenues earned by the accused infringer associated with a complete product rather than the patented component only.”).

153. See, e.g., NetAirus, ECF No. 533, at 3–4 (rejecting expert’s attempt to provide 

dollar figure for accused infringer’s hypothetical lost profits if it were to lose half its 

sales; such figures are irrelevant and not permitted by the entire market value rule).
I. Patent Damages in General

35

entire apparatus but is only an improvement on, or component of, such an apparatus.154 On the other hand, apportionment does not apply where the claimed invention is the combination of the accused product’s few features.155

A trier of fact is not required to accept either of the royalty 

rates proffered by the parties (or their experts), but its decision may be accepted so long as the royalty awarded is within 

the range encompassed by the record as a whole.156

4. Standard Setting Organizations, Reasonable and 

Nondiscriminatory Terms, and Standard Essential Patents

Standard setting organizations (SSOs) such as the Institute of 

Electrical Electronics Engineers and the International Telecommunications Union create standards for use in designing 

 

154. See, e.g., Egry Register Co. v. Std. Register Co., 23 F.2d 438, 440 (6th Cir. 

1928) (Patentee “cannot, by the language which his claims happen to take transform 

his invention of an improvement in an existing structure into one of a complete structure, as if it were wholly new, so as to entitle him to profits upon those parts of it 

which are not in any fair sense his invention.”); DataQuill, Ltd. v. High Tech Comput.

Corp., No. 08-cv-543-IEG, ECF No. 192, at 35–36 (S.D. Cal. Dec. 1, 2011) (Despite the 

use of “apparatus” language in the patent claims at issue, “DataQuill would likely 

have a hard time arguing that its patents represent the invention of the cell phone or 

even the smart-phone. The patent-in-suit only represents an improvement on an invention”—such as touch sensitive screens or integrated cameras. “Therefore the entire market value applies in this case, and DataQuill can only use the total revenue of 

the accused [cell phone] devices as the royalty base if it can show that the rule has 

been satisfied.” (citations to Lucent and Uniloc omitted)). See also Fractus, No. 09-cv203, ECF No. 896, at 2 (Patentee may not introduce consumer surveys that attempt 

to quantify the estimated value of consumers’ preference for internal, versus external, cell phone antennas, where patentee “did not invent, and the patents-in-suit do 

not cover, all internal cell phone antenna designs.” Patentee’s invention is only one 

type of internal antenna that purportedly provides certain advantages.).

155. AstraZeneca, 782 F.3d at 1138. In this regard, the apportionment analysis is 

not simply an exercise in prior art subtraction. As the AstraZeneca court explained, 

“it is not the case that the value of all conventional elements must be subtracted 

from the value of the patented inventions as a whole when assessing damages. For a 

patent that combines old elements, removing the value of all of those elements would 

mean that nothing would remain. In such cases, the question is how much new value 

is created by the novel combination, beyond the value conferred by the conventional 

elements alone.” Id. at 1139 (internal quotation marks omitted).

156. Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1347 (Fed. Cir. 2011). Of 

course, this presumes that there is no other infirmity with the evidence.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

36

and manufacturing technology products, e.g., WiFi and video 

coding standards. “SSOs play a significant role in the technology market by allowing companies to agree on common technological protocols so that products complying with the 

standards will work together.”157

Standards adopted by SSOs often incorporate patented 

technology that must be practiced in order to comply with an 

optional or mandatory aspect of the adopted standard. Such 

patents are sometimes “called standard essential patents or 

‘SEPs’.”158 In order to curb the market power that SEP owners 

would otherwise gain by having their patented technology 

adopted in a standard, and to ensure the standard is available 

for wide use, SSOs commonly require owners of SEPs to license their patents on reasonable and nondiscriminatory 

(RAND), or fair, reasonable, and nondiscriminatory (FRAND), 

terms.159

In the patent infringement damages context, what constitutes a “RAND royalty rate is a heavily disputed, fact-sensitive 

issue that must be resolved by a finder of fact.”160 The basic 

principles underlying the determination of what constitutes a 

RAND royalty include:

A RAND royalty should be set at a level consistent with the 

SSOs’ goal of promoting widespread adoption of their standards;

 

157. Microsoft Corp. v. Motorola, Inc., No. C10-1823, 2013 U.S. Dist. LEXIS 60233, 

at *12 (D. Wash. Apr. 25, 2013). See generally In re Innovatio IP Ventures, LLC Patent 

Litigation, No. 11-cv-9308, ECF No. 975 (N.D. Ill. Oct. 3, 2013).

158. Microsoft, 2013 U.S. Dist. LEXIS 60233, at *12–13.

159. See id. at *13. SSOs may refrain from expressly defining what constitutes a 

RAND in their agreements because they fear that taking an ex ante approach (i.e., an 

approach based on forecast rather than actual results) may have antitrust implications. See id. at *45–46. 

160. Id. at *16. District courts have asked juries to set RAND rates in cases involving the 802.11 Wi-Fi standard. Ericsson, Inc. v. D-Link Sys., Inc., No. 10-CV-0473 

(E.D. Tex. 2013), rev’d, 773 F.3d 1201 (Fed. Cir. 2014); Realtek Semiconductor Corp. v. 

LSI Corp., No. 12-cv-3451 (N.D. Cal. 2014).
I. Patent Damages in General

37

a RAND royalty should . . . recognize and seek to mitigate 

the risk of patent hold-up161 that RAND commitments are intended to avoid;

a RAND royalty should address the risk of royalty stacking 

by considering the aggregate royalties that would apply if 

other SEP holders made royalty demands of the implementer;

a RAND royalty should be set with the understanding that 

SSOs include technology intended to create valuable standards” and “must guarantee that holders of valuable intellectual property will receive reasonable royalties on that property; [and]

a RAND commitment should be interpreted to limit a patent 

holder to a reasonable royalty on the economic value of its 

patented technology itself, apart from the value associated 

with incorporation of the patented technology into the 

standard.162

The Federal Circuit embraced these basic principles in Ericsson v. D-Link,163 the first case in which it considered the issue of RAND royalty rates.164 In Ericsson, the accused infringer 

argued that the damages award against it was improper because the district court issued jury instructions that included 

the complete list of Georgia-Pacific factors, many of which 

were inapplicable or confusing in the RAND context, rather 

than instructing the jury about the patent hold-up (basing 

compensation on the infringer’s investment or benefit of the 

standard, rather than solely on the value of the patented invention) and royalty stacking (where a product may infringe 

multiple patents and may bear multiple royalty burdens)—

concerns that RAND provisions are intended to address.165 In 

vacating the jury’s damages award, the Ericsson court held:

 

161. A “patent hold-up” is a demand from a SEP owner for excessive patent royalties based on the leverage gained by the SEP owner from its patented technology 

being included in a standard. 

162. Microsoft, 2013 U.S. Dist. LEXIS 60233, at *42–44.

163. 773 F.3d 1201 (Fed. Cir. 2014).

164. See id. at 1229.

165. See id.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

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a district court must instruct the jury only on factors that 

are relevant to the specific case at issue;

[a district] court should instruct the jury on the actual 

RAND commitment at issue and must be cautious not to instruct the jury on any factors that are not relevant to the 

record developed at trial;

district courts must make clear to the jury that any royalty 

award must be based on the incremental value of the invention, not the value of the standard as a whole or any increased value the patented feature gains from its inclusion 

in the standard; [and]

if an accused infringer wants an instruction on patent holdup and royalty stacking, it must provide evidence on the 

record of patent hold-up and royalty stacking in relation to 

both the RAND commitment at issue and the specific technology referenced therein.166

The Ericsson court explained that “courts must consider 

the facts of record when instructing the jury and should avoid 

rote reference to any particular damages formula.”167 It is not 

sufficient to simply instruct the jurors on all the Georgia-Pacific factors without modification and without regard to their 

relevance to the case at hand. Although the Ericsson court 

considered the extent to which the Georgia-Pacific factors (either as-is or in a modified form) applied to the underlying 

case,168 it expressly declined “to create a new set of GeorgiaPacific-like factors for all cases involving RAND-encumbered 

patents.”169

Special apportionment issues arise when dealing with 

SEPs, namely that “the patented feature must be apportioned 

 

166. See id. at 1235.

167. Id. at 1232. With respect to the Ericsson case, the Federal Circuit noted that 

Georgia-Pacific factors 4 and 5 are irrelevant because they are inconsistent with a 

licensor’s RAND obligations, and that factors 8–10 required modification and/or different treatment in view of a licensor’s RAND obligations. Id. at 1230–31.

168. See id. at 1230–31.

169. See id. at 1232; see also id. at 1235 (“There is no Georgia-Pacific-like list of 

factors that district courts can parrot for every case involving RAND-encumbered 

patents.”).
I. Patent Damages in General

39

from all of the unpatented features reflected in the standard” 

and “the patentee’s royalty must be premised on the value of 

the patented feature, not any value added by the standard’s 

adoption of the patented technology.”170 This apportionment 

requirement applies to all SEPs, not just RAND-encumbered 

patents.171

C. Damages or Other Monetary Relief Under the HatchWaxman Act

In Hatch-Waxman cases filed under 35 U.S.C. § 271(e)(2), the 

statute treats submission of an Abbreviated New Drug Application for approval to market a drug covered by an unexpired 

patent as an act of infringement. Remedies available for infringement under § 271(e)(2) are set forth in § 271(e)(4). Under § 271(e)(4)(C), courts are permitted to award damages 

only if commercial activity had occurred in the United States, 

including commercial manufacture and importation of commercial products.

In determining damages under § 271(e)(4)(C), courts have 

applied the traditional lost profit or reasonable royalty damages for patent infringement under § 284.172 For example, in 

AstraZeneca v. Apotex, the patentee sought damages under 

§ 271(e)(4)(C) for the accused infringer’s launch of its approved generic product before expiration of the patentee’s 

patents. The Federal Circuit reviewed damages awarded under § 271(e)(4)(C) based on a reasonable royalty theory173

and confirmed that this statute provides only the “typical” 

damages for patent infringement and thus does not provide 

 

170. Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc. (“CSIRO”), 

809 F.3d 1295, 1303 (Fed. Cir. 2015) (quoting Ericsson, 773 F.3d at 1232).

171. Id. (“reaffirming” Ericsson, 773 F.3d at 1231).

172. AstraZeneca AB v. Apotex Corp., 985 F. Supp. 2d 452, 489 (S.D.N.Y. 2013); 

see also Aktiebolag v. Andrx Pharms., Inc., 695 F. Supp. 2d 21, 29–30 (S.D.N.Y. 2010)

(holding that damages for “commercial manufacture” alone may be assessed under 

§ 284 for lost profit or reasonable royalty damages). 

173. AstraZeneca, 782 F.3d at 1330–31. 
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

40

any monetary relief for commercial sales that occurred after 

the patents expired.174

D. Burdens, Methods, and Standards of Proof

The amount of patent infringement damages is a question of 

fact.175 The patentee has the burden of proving damages176

and must do so by a preponderance of the evidence.177 Whatever damages theory is pursued, patent infringement is a statutory cause of action akin to a tort, and like other tort damages, the aggrieved party has the burden of proving both that 

the economic harm was reasonably foreseeable and that it 

was caused by the infringer.178

The ultimate burden of proof on damages subsumes burdens on subsidiary issues. For example, the patent owner has 

the burden to justify application of the entire market value 

rule179 and to show that other licenses it relies on as evidence 

 

174. Id. at 1343 (§ 271(e)(4)(B) and (C) “provide the ‘typical remedies’ for patent

infringement: injunctive relief and money damages”). The AstraZeneca court rejected 

the award of damages based on any post-expiration sales that occurred during the 

pediatric exclusivity period. Id. at 1344–45. Pediatric exclusivity refers to a six-month 

exclusivity period that begins on the date an existing patent on a drug product expires. 21 U.S.C. § 355a. It does not extend the term of the existing patent; instead, it 

prohibits the FDA from approving another drug application on the same drug during 

that six-month period.

175. SmithKline Diagnostics, Inc. v. Helena Labs. Corp., 926 F.2d 1161, 1164 (Fed. 

Cir. 1991).

176. Id.; see also Blake v. Robertson, 94 U.S. 728, 733 (1876) (“Damages must be 

proved; they are not to be presumed.”); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 

1301, 1324 (Fed. Cir. 2009) (“The burden of proving damages falls on the patentee.”).

177. Vulcan Eng’g Co. v. Fata Aluminium, Inc., 278 F.3d 1366, 1376 (Fed. Cir. 

2002).

178. Coupe v. Royer, 155 U.S. 565, 582 (1895) (patent infringement damages are 

the pecuniary losses that the patent owner “has suffered from the infringement”); 

King Instrument Corp. v. Perego, 65 F.3d 941, 948 n.3 (Fed. Cir. 1993) (economic harm 

limited by foreseeability); Rite-Hite, 56 F.3d at 1546 (same). “‘[W]hile it may be appropriate to speak loosely of patent infringement as a tort, more accurately the cause of 

action for patent infringement is created and defined by statute.’” 3D Sys., Inc. v. 

Aarotech Labs., Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998) (quoting North Am. Philips 

Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576, 1579 (Fed. Cir. 1994)).

179. Lucent, 580 F.3d at 1336 (“For our entire market value rule to apply, the 

patentee must prove that the patent-related feature is the basis for customer demand.” (internal quotation marks omitted)).
I. Patent Damages in General

41

of the terms to which the parties to the hypothetical negotiation would have agreed are sufficiently comparable to the hypothetical license.180 The accused infringer has no obligation 

to rebut the patentee’s damages evidence until the patentee 

meets its burden of producing reliable and sufficient evidence 

to prove the amount of damages.181

The patentee’s burden in establishing patent damages has 

been described as “a burden of reasonable probability.”182 Regardless of the form of damages, the court should not apply 

any less rigorous standard of admissibility to the evidence 

than that required by the rules of evidence183 or any less rigorous standard to the proof of facts. Courts recognize that 

“any reasonable royalty analysis ‘necessarily involves an element of approximation and uncertainty.’”184 Speculation, however, is not evidence.185 Courts may allow damage awards 

based only on “sound economic and factual predicates.”186

As with any other cause of action, a patentee may succeed 

in proving liability but fail to prove the amount of its damages. 

In such instances, the question arises whether the patent 

damages statute nevertheless requires the trial court to discern and award some amount as a reasonable royalty, or 

 

180. Id. at 1329 (patentee has burden to prove that other licenses it relies on are 

sufficiently comparable to support the damages award). Of course, the accused infringer has the same burden when it offers a damages analysis based on other licenses. See, e.g., Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1211–11 (Fed. 

Cir. 2010).

181. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 872 (Fed. Cir. 2010).

182. Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. 1983).

183. See Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc., 246 

F.3d 1336, 1354–58 (Fed. Cir. 2001) (affirming grant of JMOL on lost profits because 

expert testimony was “incompetent” and “unreliable,” and affirming grant of JMOL 

on price erosion because expert testimony was “unreliable” and “used an inappropriate benchmark”).

184. Lucent, 580 F.3d at 1325 (citing Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 

512, 517 (Fed. Cir. 1995)).

185. Id. at 1327.

186. Integra Life Sciences I, Ltd. v. Merck KgaA, 331 F.3d 860, 870–72 (Fed. Cir. 

2003) (reversing denial of JMOL on reasonable royalty where record not clear on 

date of first infringement); Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1311 

(Fed. Cir. 2002).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

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whether the result properly can be an award of no damages.187

The courts have not answered this question consistently. On 

the one hand, the Federal Circuit has made clear that the patentee bears the burden of proving its damages,188 and it has 

affirmed an award of zero damages on the ground that “none 

were proven.”189 A number of district courts have dismissed 

cases or granted summary judgment of no damages where the

patentee failed to prove its damages.190 That is consistent 

with the legislative history of the 1946 legislative amendment, 

which explained that the addition of the “not less than a reasonable royalty” language to § 284 was intended “to make the 

basis of recovery in patent-infringement suits general damages, that is, any damages the complainant can prove, not less 

than a reasonable royalty, together with interest from the 

 

187. See 35 U.S.C. § 284 (“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 . . . .”).

188. Lucent, 580 F.3d at 1324.

189. Gustafson Inc. v. Intersystems Ind. Prods. Inc., 897 F.2d 508, 509–10 (Fed. 

Cir. 1990). See also Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1328 (Fed. Cir. 2014) 

(“[I]n a case completely lacking any evidence on which to base a damages award, the 

record may well support a zero royalty award.”); Lindemann Maschinenfabrik GmbH 

v. Am. Hoist & Derrick Co., 895 F.2d 1403, 1406 (Fed. Cir. 1990) (emphasizing the distinction between proving the fact of damages and the amount of damages; having 

created a “sparse and totally inadequate record” with “little or no satisfactory evidence of a reasonable royalty,” patentee may not successfully argue on appeal that 

the $10,000 damages award by the trial court was unreasonable). In DePuy Spine, Inc. 

v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1334–35 (Fed. Cir. 2009), the Federal 

Circuit affirmed the district court’s rejection of the patentee’s challenge to a jury 

verdict of 0% royalty where the jury verdict also found infringement and the instructions required the jury to choose a royalty rate between 6% and 15%, because the 

patentee did not object to the inconsistent verdict after the verdict was read, but 

avoided having to deal with the statutory damages floor because the lost profits 

award exceeded the patentee’s reasonable royalty request.

190. See, e.g., AVM Techs., LLC v. Intel Corp., 927 F. Supp. 2d 139, 146 (D. Del. 

2013) (excluding plaintiff’s untimely expert testimony and granting summary judgment of no damages because plaintiff therefore had no evidence to prove damages); 

Unicom Monitoring, LLC v. Cencom, Inc., No. 06-1166, 2013 U.S. Dist. LEXIS 56351, at 

*24 (D.N.J. Apr. 19, 2013) (granting summary judgment of no damages where plaintiff 

failed to provide competent proof of a reasonable royalty).
I. Patent Damages in General

43

time infringement occurred, rather than profits and damages.”191 Other cases, however, state that the patent statute 

requires an award of at least a reasonable royalty and the patentee is therefore entitled to such an award, even if it failed 

to provide sufficient proof of the damages amount.192

If faced with such a failure of proof, a trial court should 

consider the current state of the law, along with the legislative history of § 284. It also should consider whether the record includes evidence from which an appropriate royalty 

could be determined without speculation or guesswork.193 Of 

course, a patentee need not present expert testimony on damages, and mere exclusion of a party’s expert damages testimony does not warrant denial of damages.194

 

191. SmithKline Diagnostics, 926 F.2d at 1164 n.1 (emphasis added) (citation 

omitted).

192. See, e.g., Norian Corp. v. Stryker Corp., 363 F.3d 1321, 1333 (Fed. Cir. 2004) 

(reversing and remanding jury verdict awarding no damages on the ground that no 

damages had been proven; because the patent damages statute “requires” that reasonable royalty damages be awarded, “[t]he jury’s finding of no damages cannot be 

supported”); Embrex Inc. v. Service Eng’g Corp., 216 F.3d 1343, 1350 (Fed. Cir. 2000) 

(vacating lost profits award as unsupported by evidence, but noting that patentee 

“in no event” loses entitlement to reasonable royalty; although the record does not 

contain sufficient evidence to compute a reasonable royalty, case is remanded for 

trial court to determine what the royalty should be).

193. See, e.g., Lindemann, 895 F.2d at 1406, 1408 (affirming court’s award of damages despite patentee’s failure to prove its damages, based in part on accused infringer’s evidence of what a reasonable royalty would be). 

194. See Info-Hold, Inc. v. Muzak LLC, 783 F.3d 1365, 1372 (Fed. Cir. 2015) (reversing grant of summary judgment on reasonable royalty damages because, in spite 

of the preclusion of patentee’s expert testimony, there was “other record evidence 

which the district court could use as a basis for determining a reasonable royalty”); 

Apple v. Motorola, 757 F.3d at 1330 (“Even if [plaintiff] had not submitted expert evidence, this alone would not support a finding that zero is a reasonable royalty.”); 

Versata Software Inc. v. SAP Am., Inc., 717 F.3d 1255, 1267–68 (Fed. Cir. 2013) (affirming reasonable royalty jury verdict where district court precluded patentee’s expert 

from testifying on reasonable royalty damages but accused infringer’s expert testimony provided sufficient basis for award).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

44

II. Early Evaluation of Patent Damages

Trial courts can—and often do—implement a variety of casemanagement techniques in the early stages of a patent case 

to evaluate the approximate dollar value of the action by focusing on damages issues, damages theories, and potential 

exposure.195 Early damages disclosures and discussion can 

benefit both the court and the parties by providing a “realistic 

evaluation of both Defendant’s exposure and Plaintiff’s damages calculation and further promote early and effective mediation.”196 This can help close the gap in the parties’ views of 

the value of the case, which is often a key to early settlement. 

Even where early settlement does not result, early focus on 

damages issues can help a court identify opportunities to creatively manage the case and streamline it for trial, resulting in 

time and resource savings for both the court and the parties.

There are many ways for a court to evaluate the monetary 

value of patent cases earlier, rather than later. For example, 

courts should require complete and meaningful early damages disclosures pursuant to Rule 26 of the Federal Rules of 

Civil Procedure, and should also consider requiring the parties to exchange formal damages contentions at or near the 

time they serve their infringement and noninfringement contentions. See section III below. Another technique is to permit 

an early summary judgment motion on key damages issues 

that could significantly refine or narrow the case and help 

bring the value of the case into sharper focus. See section V

below. Courts should consider using the initial case management conference as an opportunity to elicit the parties’ respective damages positions and goals. Experience has shown 

 

195. Former Chief Judge Randall Rader has encouraged trial courts to perform 

such early evaluations to “get a good idea of the worth of the contested technology 

and its implications in the market place” and to “identify cases that would benefit 

from tailoring the standard procedures to fit the case and its significance.” See

https://patentlyo.com/media/docs/2011/09/raderstateofpatentlit.pdf at 15.

196. Id.
II. Early Evaluation of Patent Damages

45

that, by focusing on and candidly discussing damages theories and issues early in a case, courts may be able to identify 

cases that present opportunities for creative management 

and early disposition.

Like all case-management issues, early damages evaluation is not a formulaic exercise, but should be approached 

flexibly, based on the facts and circumstances of each action. 

The early evaluation approaches available to the courts are 

as varied as the cases themselves. Whether—and how—to 

implement them will turn on the court’s assessment of the 

parties, the facts, the nature of the case, and the disputed issues.

Some techniques that have been used with success include the following:

Where the parties are able to identify a small number of 

disputed key claim terms whose resolution is potentially 

dispositive, an early, focused claim construction hearing 

may be held (with the possibility of an early motion for 

summary judgment thereafter), and may be accompanied 

by a stay of all discovery not related to either the early 

claim construction or the resulting focused dispositive 

motion.197

Where the patent holder previously has licensed the patent-in-suit, the patent holder may be ordered to make an 

early production of its license agreements, while the accused infringer is ordered to produce accused product 

 

197. See Parallel Networks L.L.C. v. Abercrombie & Fitch Co., No. 6:10-cv-111, 

ECF No. 338, at 6 (E.D. Tex. Mar. 15, 2010). After consolidating the four Parallel Networks cases and implementing these procedures, the trial court construed three 

claim terms and granted in part the defendants’ resulting motion for summary judgment, which resolved the case as to 99 of 112 defendants. But see McAirlaids, Inc. v. 

Kimberly-Clark Corp., No. 7:13-cv-193, ECF No. 23, at 2 (W.D. Va. Aug. 5, 2013), in which 

the court denied defendant’s request for an initial phase of discovery, claim construction, and dispositive motions limited to a single claim term, on the grounds that 

construing a single term “divorced from contextual clues” would (1) “hamstring” the 

court’s analysis, because a court often must interpret claim terms that are not in 

dispute to provide a proper context for construction of the disputed term and (2) potentially make appellate review of the court’s analysis more difficult.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

46

sales data. This may be followed by an early mediation, 

with the possibility (to be determined later, if the mediation does not resolve the case) of an early Markman hearing.198

Alternatively, following the case-management conference, 

the patentee may be required to produce its license agreements and infringement contentions, and the accused infringer to produce accused product sales data.199 The parties also may be encouraged to make whatever additional 

disclosures are necessary or helpful to facilitate meaningful infringement and settlement discussions—all before an 

early mediation.200

Following an early status conference, a Markman hearing 

may be scheduled, the patentee may be ordered to produce its preliminary infringement contentions and license 

agreements, accused infringers may be ordered to produce limited technical disclosures and a financial summary, discovery may be stayed in whole or in part, and the 

parties may be directed to participate in early mediation. 

Any accused infringers that remain in the case following 

the early mediation are permitted to request a mini-Markman hearing (in advance of an already-scheduled full 

Markman) to address a limited set of claim terms.201

 

198. See PACid Group L.L.C. v. Cisco Sys. Inc., No. 6:09-cv-324, ECF No. 282 (E.D. 

Tex. May 17, 2011). Following implementation of these procedures, the case was dismissed as to all defendants before any claim construction hearing.

199. That the sales revenue and profit of the accused products may never be 

shown to the jury, see, e.g., LaserDynamics, Inc. v. Quanta Computers, Inc., 694 F.3d 

51, 68 (Fed. Cir. 2012), should not serve as an impediment to its production, since 

that data often serve as the only available starting point for damages discussion at 

the outset of the case.

200. See Uniloc USA, Inc. v. Sony Corp. of Am., No. 6:10-cv-373, ECF No. 126 (E.D. 

Tex. May 20, 2011). In this case, one of seven involving 95 defendants, the court’s 

early evaluation procedures resulted in numerous dismissals before claim-construction proceedings.

201. See Wordcheck Tech, LLC v. Alt-N Techs. Ltd., No. 6:10-cv-457, ECF No. 525 

(E.D. Tex. Jan. 11, 2012). The court’s early evaluation procedures in this case resulted 

in dismissal of all defendants before any claim-construction hearing.
II. Early Evaluation of Patent Damages

47

Where the status conference shows that damages issues 

are likely to predominate over the merits issues, the merits issues may be stayed and the case subjected to “reverse-bifurcation,” by scheduling for trial damages issues 

separately before liability issues. The goal is to inform the 

parties of the stakes in the case, thereby enhancing the 

possibility of early settlement and potentially achieving 

significant time and cost savings for both the court and 

the parties.202

This is not to suggest that any of these procedures would 

be appropriate or effective—or that they should be adopted

—in every patent case. It is only to suggest that experience in 

some courts has shown that (1) there are many tools available to a trial court to conduct an early evaluation of the value 

of a case; (2) patent cases can present opportunities for creative case-management techniques that can (and should) be 

considered and, where appropriate to implement, be tailored 

to the circumstances of each case; and (3) early, open communication between the court and the parties about damages—preferably, beginning as early as the case-management 

conferences—can provide the court valuable insight into 

whether the case is one that likely would benefit from implementation of these or other early evaluation techniques and, 

if so, what specific techniques would be appropriate.

 

202. See infra text accompanying notes 374–78.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

48

III. Pleadings and Mandatory Initial Disclosures

Because Rule 8(a)(3) requires only “a demand for the relief 

sought, which may include relief in the alternative or different 

types of relief,”203 patent infringement complaints rarely assert the damages claim in any more detail than a request “for 

damages.” Any lack of specificity in the complaint may well 

be overcome by the requirement of Rule 26 that the patent 

owner voluntarily provide damages information and documents as part of its initial disclosures. The rule states:

(A) In General. Except as exempted by Rule 26(a)(1)(B) or 

as otherwise stipulated or ordered by the court, a party 

must, without awaiting a discovery request, provide to the 

other parties:

. . .

(iii) a computation of each category of damages claimed 

by the disclosing party—who must also make available for 

inspection and copying as under Rule 34 the documents or 

other evidentiary material, unless privileged or protected 

from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered . . . .

204

The amount of detail and precision that is possible to provide in initial disclosures will vary from case to case. And 

there can be practical limits to how much can be disclosed 

early in a case. Patentees often find that they do not know the 

full nature and extent of a defendant’s infringing conduct and 

do not have sufficient information at the outset of the litigation to know or calculate precisely the damages caused by 

the alleged infringement.205 As a consequence, patentees of-

 

203. Fed. R. Civ. P. 8(a)(3).

204. Fed. R. Civ. P. 26(a)(1).

205. See Fed. R. Civ. P. 26(a)(1) advisory committee’s note to 1993 amendment 

(“a party would not be expected to provide a calculation of damages which, as in 

many patent infringement actions, depends on information in the possession of another party or person”).
III. Pleadings and Mandatory Initial Disclosures

49

ten limit their initial damages disclosures to general categories of patent damages, such as “lost profits and reasonable 

royalty damages.” Moreover, because the accused infringer’s 

profit information, for example, is not typically information a 

patentee would know absent discovery, any initial damages 

calculations that are provided may reasonably be considered 

preliminary or approximate.

At the same time, courts should not accept skeletal initial 

damages disclosures uncritically. While courts should recognize that the fair determination of damages may require the 

use of confidential information of both parties, and that each 

party may require fact discovery before they can understand 

the other’s information sufficiently to formulate detailed damages contentions, both sides should be required to provide 

initial damages disclosures that are as complete as is reasonably possible, as well as at least “high level” documents in 

their possession that are likely relevant to a fair assessment 

of the damages issue.206 Courts may wish to discuss with 

counsel the possibility of consulting with their damages experts or using other appropriate analytical resources in connection with the early disclosures.

The Northern District of California has by local rule required the parties to provide the following: 

• before the initial case-management conference “a 

non-binding, good-faith estimate of the damages 

 

206. In Corning Optical Communications Wireless Ltd. v. Solid, Inc., 306 F.R.D. 276, 

277 (N.D. Cal. 2015), the court recognized a situation that is, unfortunately, not uncommon in patent infringement litigation:

Just a few months from trial, and a few weeks from the close of fact 

discovery, the parties in this patent case are working hard. They 

have exchanged reams of data. They have scheduled certain fact 

depositions and scheduled many more. They have retained multiple 

experts who are furiously scribing reports with scores of exhibits 

and schedules. All of this, undoubtedly, is costing a small fortune. 

And yet, remarkably, neither side has any firm sense of whether this 

is a $1 case or a case worth billions. Even more remarkable, the parties here are not unusual. For years it has been the norm in patent 

cases to bludgeon first and value second.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

50

range expected for the case along with an explanation for the estimates”

• with the disclosure of asserted claims identification 

of the start and end of the damages period, all 

agreements the patentee “contends are comparable to a license that would result from a hypothetical reasonable royalty negotiation,” all agreements 

that “otherwise may be used to support” the patentee’s damages case, documents sufficient to 

show that its commercial embodiments were 

marked, documents sufficient to show sales, revenues, costs and profit for lost profits, and documents reflecting any RAND agreement covering the 

asserted patent

• with the invalidity contentions agreements the accused infringer contends are comparable to the hypothetical license, documents sufficient to show 

the sales, revenue, cost and profits for the accused 

devices, and all agreements that may be used to 

support the accused infringer’s damages case, and 

• damages contentions and responsive damages contentions.207

Other courts have used scheduling or other orders to require 

damages disclosures and contentions.208

Some courts that have more rigorously interpreted the 

disclosures required by Rule 26 have tied the scope of the 

disclosures to the parties’ Rule 11 obligations, noting that a 

plaintiff “must, of course, have a basis for its damages when 

 

207. U.S. District Court, Northern District of California, Patent Local Rules, 

http://www.cand.uscourts.gov/localrules/patent (Rules 2.1, 3.1–3.2, 3.4, and 3.8–3.9).

208. In re West View Research, LLC Patent Cases, Nos. 14-cv-2668, 2670, 2675, 

2677, 2679, ECF No. 33, at 7–8 (“Case Management Order”) (S.D. Cal. Apr. 24, 2015); see 

also Scheduling Order (Patent), http://ded.uscourts.gov/judge/judge-sue-l-robinson

(J. Robinson, D. Del., rev. Feb. 5, 2015); Patent Scheduling Order (Non-ANDA), 

http://www.ded.uscourts.gov/judge/chief-judge (C.J. Stark, D. Del., rev. June 2014).
III. Pleadings and Mandatory Initial Disclosures

51

it files suit.”209 For example, with pointed references to plaintiff’s Rule 11 obligations, one such court has insisted that 

plaintiffs must disclose “what is or should be known” at the 

time of the Rule 26 disclosures without waiting for complete 

information to be developed through discovery, explaining:

[T]hat some material is as yet unknown does not excuse 

non-disclosure of what is or should be known. Plaintiff is not 

required to do the impossible but is required to do the best 

it can. Just because some items cannot yet be disclosed 

does not mean that nothing should be disclosed.210

The same court ruled that a patentee seeking lost profit 

damages should be able to state in its Rule 26 disclosures the 

approximate dollar amount of its lost sales and how they were 

calculated; to identify each of its products that compete with 

the accused products; and explain how the sales of its products were affected by the alleged infringement.211 Similarly, 

the court found that patentees seeking reasonable royalty 

damages should be able to state the claimed royalty rate and 

base for each accused product on a yearly basis, even if later 

discovery might require revisions to the calculations.212 Another court has required disclosure of the amount of damages 

under each theory; apportionment of damages between accused infringers and asserted patents; the time period in 

which the patentee seeks damages for each asserted patent;

to the extent the patentee seeks damages under both lost 

profits and reasonable royalty; the theory under which such 

recovery is appropriate; the witnesses and documents on 

which the patentee seeks to rely in support of its damages 

claim; the factual basis for any lost profits claim (including 

 

209. Eon Corp. IP Holdings, L.L.C. v. Sensus USA Inc., No. 3:12-cv-1011 (N.D. Cal. 

Mar. 8, 2013); see also Brandywine Comm. Techs. L.L.C. v. Cisco Sys. Inc., No. 3:12-

cv-1669, ECF No. 114, at 2 (N.D. Cal. Nov. 13, 2012) (plaintiff should be able to provide 

the unprivileged documents on which it will rely for damages “save and except for 

those not yet known to it despite the type of diligent pre-suit investigation required 

by Rule 11”).

210. Brandywine, No. 3:12-cv-1669, ECF No. 114 at 4.

211. Id. at 2.

212. Id. at 2–3.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

52

the identity and amount of the patentee’s products on which 

profits were lost); and the facts on which the patentee bases 

its reasonable royalty claim, including the date of hypothetical negotiation; any allegedly comparable license agreements; the terms of the reasonable royalty sought; “and any 

other Georgia-Pacific factors on which [the patentee] intends 

to rely.”213

Each court must determine the scope of disclosures that 

reasonably can be expected in each case. For a patentee, however, initial disclosures normally should include documents 

concerning sales and profitability, market shares, and comparable license agreements and royalty rates related to the patent at issue. They also may include basic marketing, pricing, 

manufacturing, and sales information relating to any products or processes that embody the patented invention or are

licensed under the patent, or that compete with, or are sold 

with or sold as a result of sales of products or processes that 

embody the patented invention or are licensed under the patent.

For the accused infringer, the documents initially produced should similarly include documents concerning license agreements and royalty rates that relate to the accused 

product or process; basic marketing, pricing, and sales information relating to the accused products; and the availability 

of any noninfringing substitutes; as well as information that 

otherwise may be relied on to define the royalty rate or 

base.214

 

213. Corning Optical, 306 F.R.D. at 277. Another factor that could affect the ultimate damages award significantly is the prejudgment interest rate, and focusing the 

parties on that rate by requiring them to identify it early on could lead one or both 

parties to better understand the effect of timing on settlement. 

214. See id. at 278 (“Accused infringers must disclose ‘any license agreement 

known by it (such as, for example, any license agreement in its own portfolio) that it 

may use to support its view of a reasonable royalty.’”); Brandywine, ECF No. 114, at 

4 (Accused infringer is not required to provide damages computation but must disclose any license agreements known to it that it may use to support its contention 

regarding a reasonable royalty; “It may not hold back this disclosure merely because 
III. Pleadings and Mandatory Initial Disclosures

53

Meaningful compliance with the initial damages disclosure requirements can be essential to the efficient management of the litigation for many reasons. For example, courts 

overseeing damages disclosures should be mindful of the role 

these disclosures may play in the early resolution of the litigation. Thoughtfully crafted early damages disclosures can 

be helpful in maximizing the potential for early settlement 

Conversely, failure to provide good-faith damages disclosures 

and at least “high level” damages discovery at the outset of 

the litigation may hinder settlement discussions, delay settlement, and result in unnecessary expenditure of time, money, 

and judicial resources.215 The prospects for early resolution 

of a case are greatly enhanced when all parties have an understanding of the economic stakes.

Even where the initial disclosures do not lead to an early 

settlement, they can be useful to the court in developing an 

efficient and effective approach to management of the case. 

With a clearer understanding at the outset of the nature and 

scope of the case, courts can more readily tailor their pretrial 

orders and procedures to the needs of the case. For example, 

early damages disclosures can provide information that is 

useful in fashioning an appropriate discovery plan, including 

the timing and extent of discovery related to damages. With 

meaningful early damages disclosures, the court can evaluate 

whether, in any given case, it would be appropriate and useful

to set an accelerated schedule for fact and expert discovery 

 

it has not yet seen the patent plaintiff’s damages study.”); Eon, ECF No. 657, at 4 (defendants must “disclose generally their revenue as well as relevant license information”).

215. See Eon, ECF No. 657, at 2 (early damages disclosures can help parties realistically assess the value of a case and promote early, effective settlement discussions). Accused infringers often are unwilling to disclose sales, profits, and other 

business information that is fundamental to the calculation of damages on the 

ground that the information is highly confidential and cannot properly be disclosed 

to the patent owner. As explained in section IV.C below, the best course is for the 

court to ensure that the confidentiality of initial disclosures is adequately protected, 

either by local rule, standing order, or an early protective order.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

54

related to damages. Moreover, early disclosure of the estimated range of damages—or at the very least an estimated 

“order of magnitude of damages at issue (e.g., less than 

$10 million; $25 million; more than $100 million)”—may be 

necessary for a court to apply the proportionality principle 

that informs the scope of discovery that is warranted in a particular case.216 Revised Rule 26 explicitly identifies “the 

amount in controversy” as a factor in determining proportionality.217 Without some level of damages disclosures, a court 

would be hard pressed to ensure that the burden and expense 

of proposed discovery is warranted. Earlier damages disclosure also may assist the parties in framing discovery and help 

the court manage discovery by shedding light on the damages 

issues for which discovery will be needed and appropriate. 

Meaningful early disclosure of damages information also 

may help identify damages issues that can be addressed early 

in the case as a matter of law, e.g., where a damages theory is 

legally flawed or where the factual basis for a party’s damages 

analysis is incorrect as a matter of law, as when an incorrect 

date is used for the hypothetical negotiation for the determination of a reasonable royalty or a party seeks to benefit from 

the entire market value rule without evidence that “the patented feature creates the basis for customer demand or substantially create[s] the value of the component parts.”218 Finally, requiring parties to focus on—and disclose—damages 

theories and evidence earlier in a case may help “reduce the 

likelihood that fundamental disputes about damages theories 

 

216. Eon, ECF No. 657 at 2; Patent Management Guide, supra note 2, at 2-83, 4-2 

to 4-3.

217. Fed. R. Civ. P. 26(b)(1) (discovery is limited to relevant, nonprivileged matter that is “proportional to the needs of the case”); Patent Management Guide, supra

note 2, at 2-83 (early discussion with parties at first case-management conference 

about the scope of the case and nature and amount of damages can “provide a useful 

baseline to judge proportionality as the case progresses”).

218. Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011).
III. Pleadings and Mandatory Initial Disclosures

55

and evidence are relegated to the eve of trial,” when the parties and court may not be able to address them as thoroughly 

as necessary.219

To the extent early damages disclosures require production of a party’s sensitive financial information, such concerns can be addressed by early entry of a protective order, 

either through a court’s “default” protective order that becomes effective automatically at the outset of a patent case 

or, if the parties have not agreed upon a final protective order 

early in the case, with a temporary protective order that ensures confidentiality of damages or other early discovery materials until a final protective order can be entered.220 Confidentiality concerns should not preclude or impede early damages disclosures. See section IV.C below.

District courts across the country have recognized the 

need to require early disclosure of initial infringement, noninfringement, invalidity, and validity contentions from patent 

infringement litigation parties.

221 These requirements avoid a 

“shifting sands” approach to infringement or invalidity that is 

 

219. The Patent Management Guide suggests that requiring meaningful early 

damages disclosures avoids last-minute Daubert motions and that “resolving Daubert

challenges well before the pretrial conference is good practice.” Patent Management 

Guide, supra note 2, at 7-26 to 7-27. It explains: Where Daubert challenges are raised 

with the court at the end of the case, “a court that believes that an expert’s opinions 

may not be reliable is typically faced with imperfect options: (a) excluding the expert 

and leaving the party with no expert testimony regarding damages at trial; (b) continuing the trial date and providing the party proffering the expert a do-over; or (c) allowing the testimony, despite its reservations, with the belief that the jury will see 

the weakness in the opinions and the intent that, if not, the court will correct the 

outcome through remittitur, JMOL or a motion for new trial.” Id. On the other hand, 

early consideration of a damages Daubert motion, separate from summary judgment 

and in limine motions, allows for more thorough briefing and consideration, gives 

the court adequate time to consider the merits of the challenge, and may prevent the 

risk of a party being denied any expert at trial. Id.

220. See, e.g., In re West View Research, Nos. 14-cv-2668, 2670, 2675, 2677, 2679, 

ECF No. 33, at 7–8. (“The production of licenses is subject to the highest level of 

confidentiality (attorneys’ eyes only) unless the plaintiff designates them otherwise.”).

221. See, e.g., U.S. District Court, Eastern District of Texas, Patent Rules, 

http://txed.uscourts.gov/?q=patent-rules; U.S. District Court, Northern District of 

California, Patent Local Rules, http://www.cand.uscourts.gov/localrules/patent.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

56

unfair to the litigants and that unnecessarily prolongs the 

case and increases costs. 

Whether by amendment of local patent rules, a general or 

standing order, or orders in individual cases, courts also 

should consider requiring the patent owner to serve initial 

damages contentions early in the case and the accused infringer to respond shortly thereafter. Ideally, damages contentions should be served at the same time or shortly after 

the parties serve their respective initial contentions on infringement and noninfringement, so that both parties’ damages contentions can address the actual asserted claims, infringement theories, and accused instrumentalities or technology.222 In any event, formal damages contentions should 

be served early enough in the case to permit the parties—and 

the court—to identify, focus on, and address any damages 

contentions or theories that may be legally deficient or lack 

necessary evidentiary support.

The benefits of requiring formal damages contentions mirror those of meaningful initial damages disclosures: maximizing potential for early settlement, informing efficient and effective case management, and facilitating early identification 

of potentially case-dispositive (or at least case-narrowing) issues. 

Of course, even where damages contentions are required 

by rule or order, the court can modify the standard required 

content or timing of the contentions to reflect individual, 

case-specific circumstances. For example, the court might 

choose to defer damages contentions to address a critical 

claim-construction issue or early motion that is likely to be 

case dispositive, or to permit narrowly targeted discovery on 

particular products or technology that would be necessary to 

 

222. Patent Management Guide, supra note 2, at 2-79 (Damages contention disclosures “would require the patentee to identify its theories early in the case, would 

enable the accused infringer to disclose rebuttal damages theories in response to a 

contention interrogatory served during fact discovery, and would put parties in a 

position to challenge each other’s legal and factual bases for damages positions earlier in the case.”). 
III. Pleadings and Mandatory Initial Disclosures

57

ensure meaningful damages contentions. Conversely, a court 

might choose to advance the deadline for damages contentions where there is considerable history with the patent(s) 

at issue (e.g., they have been the subject of prior litigation) 

that would make earlier contentions feasible. In every case, 

however, the court should require parties, at the Rule 16 conference, to engage in a thorough discussion of how damages 

discovery and damages contentions should be tailored for 

the case and what specific information the parties believe is 

necessary for them to prepare meaningful damages contentions.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

58

IV. Discovery

A. Phased Discovery

“Discovery in patent cases can be exhaustive and exhausting,” a fact that “is only magnified by the emerging emphasis 

on electronic discovery.”223 Full-fledged damages discovery 

can raise yet another concern: It not only can be expensive,

time-consuming, and burdensome, but it ultimately may 

prove to be unnecessary, either because the case settles before trial or because the patent is determined to be invalid, 

unenforceable, and/or not infringed.

To minimize burden and improve efficiency, courts 

should consider, as part of the initial case assessment and 

scheduling, whether the interests of justice would be served 

by phasing damages discovery. For example, after the mandatory Rule 26 damages disclosures and the above-described initial “high-level” damages disclosures by both parties, the 

court may choose to stay some or all damages discovery until 

after the court’s ruling on claim construction.224 When the 

court’s ruling on claim construction is not scheduled to occur 

early in the proceedings, phasing may not be efficient, as damages discovery will take some time and might best be conducted in concert with discovery on the merits. Moreover, 

limiting initial damages discovery to high-level information 

may or may not give the parties enough basic information 

about damages to permit meaningful settlement negotiations.225 And while claim construction sometimes promotes 

either settlement or stipulation to judgment followed by appeal, or sets a case up for summary adjudication under 

 

223. Patent Management Guide, supra note 2, at 4-1.

224. Such an order usually would address the timing of consideration of not only 

compensatory damages but also willfulness and enhanced damages. The latter two 

topics are beyond the scope of this guide.

225. Early damages discovery may, for example, reveal that the potential damages may be less than the expected cost of proceeding with or defending the litigation.
IV. Discovery

59

Rule 56 (thereby obviating the need for damages discovery), 

a court-ordered hiatus on damages discovery may lead to 

significant inefficiencies by lengthening the period of fact discovery and, perhaps, delaying trial.226 Clearly, there is no onesize-fits-all approach. In each case, as part of the case-management process, courts should assess the extent to which 

the parties’ differences on damages are a barrier to resolution. Where damages are at the heart of the dispute, it may 

make sense to accelerate rather than defer damages discovery.

One benefit of phased discovery is that it allows trial of 

liability and damages to the same jury, either at the same time 

or in phases. Some courts, however, opt to bifurcate patent 

infringement cases into liability and damages phases for both 

discovery and trial. In the final analysis, the decision whether 

to implement phased discovery or order separate discovery 

and trial on damages is committed to the trial court’s discretion and would be reviewed only for abuse of discretion.227

B. Accelerated Damages Discovery

Depending on the needs and circumstances of the case, the 

court may consider ordering an accelerated discovery schedule for fact and expert discovery related to damages. For example, the Eastern District of Texas has adopted a “Track B” 

Initial Patent Case Management Order that requires the parties to submit a good-faith damages estimate early in the case 

and allows significantly less discovery (on a significantly 

shortened discovery schedule) than the normal “Track A” 

 

226. The local rules in the Northern District of Illinois establish a fact discovery 

hiatus that begins 28 days after the exchange of patent claim terms and phrases for 

construction and ends upon the entry of a claim-construction ruling. U.S. District Court, 

Northern District of Illinois, Local Patent Rules, LPR 1.3, http://www.ilnd.uscourts.gov/

_assets/_documents/_rules/localpatentrules-preamble.pdf.

227. In re Innotron Diagnostics, 800 F.2d 1077, 1079 (Fed. Cir. 1986). Separation 

orders are reviewed under Federal Circuit precedent and are not controlled by the 

law of the regional circuit from which the appeal originated. Gardco Mfg., Inc. v. Herst 

Lighting Co., 820 F.2d 1209, 1212 (Fed. Cir. 1987).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

60

management order. The Track B plan can be implemented by 

the parties’ stipulation or by order of the court.228

C. Protective Orders

Parties in patent infringement actions routinely seek—and 

are granted—a protective order to govern documents and information produced in discovery.229 There is good reason for 

this, as “a patentee will typically seek information about development of the accused product or process, marketing and 

sales by the defendant, including cost and profit margins, and 

license fees paid by the defendant for comparable technology 

rights”—“categories [that] typically include highly confidential commercial and technical information, kept as trade secrets by the litigants and third parties.”230 The need for such 

an order is particularly acute in the context of damages discovery, which often includes extremely sensitive financial information concerning a party’s costs, revenues, profits, and 

the like. Disclosure of such information publicly could severely harm a party’s business or competitive position. 

Courts must ensure that damages discovery is not used as a 

means to harm a competitor’s ability to compete in the marketplace.231

It is important that a protective order be in place early in 

the case. Few patent litigants will produce documents without one, and there is no reason to allow lack of a protective 

order to delay discovery. Some courts have adopted local patent rules that provide interim protection for all confidential 

 

228. See General Order 14-03, General Order Regarding Track B Initial Patent 

Case Management Order, http://www.txed.uscourts.gov/page1.shtml?byYear=2014

&location=general (E.D. Tex. Feb. 25, 2014).

229. See Fed. R. Civ. P. 26(c).

230. Patent Management Guide, supra note 2, at 4-2.

231. Apart from actions involving competitors, patent infringement actions 

brought by entities whose sole business is enforcing and licensing patents pose 

significant risks for an accused infringer’s confidential business information. Those 

entities may be engaging in parallel patent prosecution or evaluation of confidential 

information for purposes of other patents or portfolios. While this concern should 

be addressed by limiting the use of confidential information to the present lawsuit, 

such a restriction can be difficult to enforce.
IV. Discovery

61

information by confining disclosure, absent further court order, to outside counsel.232 Other courts address the need for 

early confidentiality protection either by adopting patent local rules containing a standard form of protective order that 

automatically applies to any filed patent case or by sua 

sponte issuing a standard protective order at the outset of the 

action.233 Such early protective orders—sometimes known as 

default orders—ensure that the parties can timely make their 

initial disclosures subject to confidentiality protection and 

also can eliminate (or minimize) costly and distracting disputes between the parties over the contents of a protective 

order. Parties still may seek to modify the court’s standard 

protective order in some respects, but having a court-imposed default order at the outset is likely to narrow and focus 

the areas of dispute. Likewise, some courts publish a model

protective order that the parties can use as a basis for negotiating their own order, knowing that the court may well lean 

toward the model provisions in resolving any dispute.234 Experience has shown that the greater the protection provided 

by a default order, the less likely the parties will be to engage 

in motion practice over the content of the order.

It often is helpful for the court to explore, at the initial 

scheduling conference, the types of confidential information 

the parties believe will likely be the subject of discovery. A

protective order—whether a default order or an order created for the particular case—may be tailored to address the 

specific types or categories of documents that pose particular 

confidentiality concerns to the parties in that action.

One of the most common areas of dispute in protective 

orders is who will be allowed access to the confidential infor-

 

232. See U.S. District Court, Northern District of Georgia, Patent Local Rules, 

http://www.gand.uscourts.gov/sites/default/files/NDGARulesPatent.pdf, at PR-4 (2004). 

233. See Patent Management Guide, supra note 2, at Appendix 2.4a (Northern 

District of California Interim Model Protective Order).

234. See id. at Appendix 2.4c (Northern District of Illinois Model Protective Order).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

62

mation and whether a multiple-tier protective order is necessary or appropriate. The traditional single-tier protective order that provides only a single level of “confidential” protection and allows designated materials to be disclosed to both 

in-house and outside counsel has given way to a two-tier protective order, which is appropriate where one or both of the 

parties believe the information to be disclosed is so highly 

confidential and competitively sensitive as to merit an extra 

level, or second tier, of confidentiality protection.235 Such additional protection is often necessary where employees or inhouse counsel for the receiving party are involved in competitive decision making, such as patent strategy, licensing negotiations, sales and marketing, and research and development 

in the relevant product market.236

In cases where the parties cannot agree on the appropriate levels of protection, the court should consider such factors as the nature of the documents to be produced and the 

possibility for competitive or other harm; the extent of involvement by in-house counsel for the receiving party in competitive decision making, versus involvement in litigation and 

settlement activities; the likelihood of over-designation at the 

higher level of protection; and the possibility of avoiding or 

 

235. See U.S. District Court, Western District of Pennsylvania, Local Rules of Court, 

http://www.pawd.uscourts.gov/sites/pawd/files/local_rules/lrmanual_0.pdf, at Appendix LPR 2.2 (2009); U.S. District Court, Southern District of California, Local Rules, 

http://www.casd.uscourts.gov/Rules/Lists/Rules/Attachments/92/Local%20Rules%20

2016%20v1.pdf, at 92 (2015). Particularly in the context of computer software source 

code, courts typically require even greater protection, such as security requirements 

for the storage and review environments, including a locked room and stand-alone 

computer, and limits on how much of the code the receiving party may copy without 

a showing of need and further order of the court.

236. See Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 

1992) (competitive decision making entails “advising on decision about pricing or 

design ‘made in light of similar or corresponding information about a competitor’”) 

(citation omitted). On the facts before it, the Brown Bag court concluded that permitting in-house counsel to have access to the producing party’s trade secret information “would place in-house counsel in the ‘untenable position’ of having to refuse 

his employer legal advice on a host of contract, employment, and competitive marketing decisions lest he improperly or indirectly reveal [the producing party’s] trade 

secrets.” Id. at 1471.
IV. Discovery

63

mitigating over-designation. Examples of such mitigation include specifically identifying the types of documents entitled 

to the higher level of protection and providing a procedure 

for the court to rule on contested designations. When the dispute focuses on whether, or to what extent, in-house counsel 

should have access to discovery materials, courts look beyond an attorney’s status as in-house counsel to evaluate the 

facts concerning the in-house counsel’s role and the risks of 

improper use or disclosure of confidential information.237

In all events, protective orders should provide that all 

confidential or highly confidential information may be used 

only for purposes of the instant litigation.

D. Limits on Depositions

Rule 30(b)(6) depositions of corporate representatives often 

are useful in patent infringement cases, particularly for financial information involved in infringement damages. Courts 

should urge parties to agree on the number of depositions

and should guard against “runaway 30(b)(6) depositions” to 

ensure they are not used to evade the limits on the number of 

 

237. See U.S. Steel Corp. v. United States, 730 F.2d 1465, 1469 (Fed. Cir. 1984) 

(“Status as in-house counsel cannot alone create the probability of a serious risk to 

confidentiality and cannot therefore serve as the sole basis for denial of access.”); 

Matsushita Elec. Indus. Co. v. United States, 929 F.2d 1577, 1579–80 (Fed. Cir. 1991) 

(attorney access to confidential information denied because movant’s competitive 

position would be compromised by unacceptable risk of inadvertent use or disclosure of confidential information owing to attorney’s involvement in “routine ‘advice 

and participation’ in ‘competitive decision making’”); Brown Bag Software, 960 F.2d 

at 1470 (a court ruling on a protective order dispute must “examine factually all the 

risks and safeguards surrounding inadvertent disclosure by any counsel, whether inhouse or retained”). See also Catch a Wave Techs., Inc. v. Sirius XM Radio, Inc., No. 

C12-05791, ECF No. 47 (N.D. Cal. Aug. 6, 2013) (court’s model protective order should 

be modified to include a “patent acquisition bar” preventing plaintiff’s counsel from 

advising any clients in the acquisition of patents involving satellite radio signal processing for the purpose of asserting them against defendant for two years after the 

conclusion of the litigation, including appeals; “[t]he two-year patent acquisition bar 

allows time for the limitations of human memory to run their course or for the information to become largely stale”).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

64

depositions.238 One effective approach is for the initial scheduling order to provide that “each day of [Rule] 30(b)(6) deposition counts as a separate deposition for purposes of the 

per-side deposition limit.”239 Disputes may arise concerning 

the scope of questioning of a particular witness. Resolving 

such disputes can be challenging and time-consuming. Where 

lawyers are unable to agree on the parameters of a subjectmatter limitation, the court may choose to enforce time limits, 

rather than subject-matter limits, on any particular deposition 

examination. Often such time limits motivate counsel to exercise good judgment and focus the examination appropriately.

The scope of topics for Rule 30(b)(6) depositions is a frequent source of dispute between parties. The rule only permits discovery of “information known or reasonably available 

to the organization.”240 Particularly with respect to patent 

damages, however, litigants frequently frame topics that are 

more appropriately addressed by a retained expert than by a 

corporate representative. In addition, litigants often frame 

topics in an overly broad manner that can provoke disputes 

regarding whether the witness was sufficiently knowledgeable or prepared. Courts should enforce the requirement under Rule 30(b)(6) that the matters for examination be described with “reasonable particularity,” and where the topics 

are properly framed, should not hesitate, if necessary, to enforce the requirement that the proffered deponent be knowledgeable.

Whatever deposition limitation the court imposes (or the 

parties agree on), it should apply only to percipient witnesses, nonretained experts (such as employees that a party 

intends to use as both an expert and a percipient witness), 

and Rule 30(b)(6) witnesses. The depositions of retained experts should not be subject to the limitation; the number of 

expert depositions is necessarily defined by the number of 

experts on which a party relies and effectively is self-limiting.

 

238. See Patent Management Guide, supra note 2, at 4-8.

239. Id.

240. Fed. R. Civ. P. 30(b)(6).
IV. Discovery

65

E. Document Retention and Production

“[D]ocument production can be extremely painful and costly 

for patent litigants.”241 And unfortunately, especially given the 

broad sweep of electronic document production and retention, it can be used as a weapon in patent infringement litigation. There arguably is no area more subject to this kind of 

abuse than patent damages documents.

Document production can be particularly painful and 

costly where, as a practical matter, there is a large disparity 

in the quantity of documents in the possession of the parties—e.g., where one of the litigants is a nonpracticing entity 

or a corporate shell patent owner that has little in the way of 

documents to be produced. In such cases, courts should be 

particularly mindful of whether a collateral objective of the 

requesting party is to increase the burden and expense of the 

lawsuit to thereby force settlement, rather than to discover 

information truly needed to determine damages. Accordingly, 

courts should be particularly cautious about granting requests for production of “all documents” relating to a particular issue (such as sales, revenues, or profits), especially 

when dealing with electronically stored information, unless it 

is clear that such production is necessary, is within the proportionality requirement of Rule 26(b), and is not propounded for the purpose of increasing cost, disrupting the litigation, or otherwise harassing the party from whom discovery is sought. It often may be more appropriate and cost-effective (and consistent with the proportionality requirement) 

to require production of documents “sufficient to show” the 

needed information, such as sales, revenues, or profits.

Courts also should ensure that Rule 34 requests for production are not abused and should take steps to facilitate effective, cost-effective document production. The need for judicial control and oversight is particularly acute when addressing requests directed to electronically stored infor-

 

241. Patent Management Guide, supra note 2, at 4-6.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

66

mation. For that reason, some courts have adopted model orders regarding e-discovery in patent cases.242 For example, at 

the outset of the case, courts should encourage cooperation 

in the discovery process, review carefully the parties’ discovery plan (including electronic discovery plan and protocols), 

and consider whether limiting the number of document requests permitted per side would yield more focused discovery or, alternatively, might result in fewer, but broader, requests that would in turn lead to unnecessary discovery and 

disputes. Given the initial disclosure requirements and local 

rules in many districts already requiring parties to produce 

what is relevant, the better approach may be to allow as many 

targeted requests as may reasonably be necessary. In any 

event, careful assessment by the parties of damages issues 

(in which the relevant information often may be provided in 

spreadsheet form) as part of the early disclosure process can 

be very helpful in facilitating the court’s ability to evaluate the 

reasonableness and proportionality of the parties’ document 

requests, particularly those calling for extensive production 

of electronically stored information.

The parties’ discovery plan also should address the format for document production, particularly as it relates to 

electronically stored documents.243 The parties should consider the potential cost and time savings that may result from 

allowing (or requiring) production of financial or other damages-related data in a format that permits ready manipulation 

for purposes of damages analyses.

In any event, courts should consider carefully the relative 

discovery costs and burdens in weighing patent damages discovery disputes and should shift costs where appropriate. 

Shifting the cost of discovery to the requester is particularly 

appropriate where a party already has received a fair amount 

 

242. See id. at 4-18 and Appendix 4.3 (Model Orders for E-Discovery).

243. Fed. R. Civ. P. 26(f)(2), (3)(C) (parties “must discuss any issues about preserving discoverable information; and develop a proposed discovery plan” addressing “any issues about disclosure or discovery of electronically stored information, 

including the form or forms in which it should be produced”).
IV. Discovery

67

of discovery on a subject but is contending that it needs 

more, or where the type of discovery sought would impose 

significant burden on the producing party. For example, 

where the accused infringer already has made available its 

production or sales summaries and the patentee insists on 

discovering documents that contain the underlying detail, the 

court should (if it permits the discovery) consider imposing 

the cost of such additional production on the party seeking 

it. On the other hand, the mere fact that one party has more 

documents to produce does not necessarily mandate discovery cost shifting, especially where the discovery sought relates to core issues in the case or is otherwise fairly needed 

by the party seeking it.

F. Mandatory Final Disclosures and Supplementation

Courts should require final damages disclosures after the parties have had the opportunity to complete damages discovery. These disclosures serve a purpose different than that of 

the individual expert reports required by Rule 26(a)(2)(B), 

which identify the damages experts’ theories and evidence 

and constrain their testimony. Final damages disclosures may 

provide a further basis for the parties’ summary judgment or 

in limine motions. Accordingly, courts should not allow the 

parties to amend final damages disclosures freely, but rather 

should require a particularized showing of good cause for belated amendment. The parties should be required, however, 

to supplement those disclosures according to the same 

standard as Rule 26(e): “if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not 

otherwise been made known to the other parties during the 

discovery process or in writing.”244

 

244. Fed. R. Civ. P. 26(e).
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68

V. Summary Judgment Motions

“Summary judgment is as appropriate in a patent case as it is 

in any other case.”245 Indeed, given the complexity of most patent infringement actions and the enormous judicial resources they often consume, narrowing a patent case through 

proper summary adjudication can be particularly important. 

Former Chief Judge Randall Rader of the U.S. Court of Appeals 

for the Federal Circuit emphasized the importance of summary judgment, noting that in “vast technical lawsuits, summary judgment is the key to efficient resolution of disputes,” 

enabling a court to “end the litigation or narrow the case to 

dimensions more amenable to settlement.”246

In addition to issues related to infringement and validity, 

there are a number of damages issues that may be amenable 

to summary judgment.

A. Timing of Summary Judgment on Damages

Effective management—and narrowing—of a case through 

dispositive motions depends in part on the timing of such motions and the rulings on them. In many cases, important evidence relating to damages will come in the form of expert testimony. For that reason, it is often appropriate for the court 

to consider summary judgment motions relating to damages 

at the same time as—but separate from—Daubert challenges 

to the experts’ opinions.

Setting an early schedule for summary judgment motions 

on one or more aspects of the patentee’s damages case can 

be a very effective technique to reduce the disparity between 

the parties’ views of the value of a patent case and, perhaps, 

 

245. Desper Prods., Inc. v. QSound Labs, Inc., 157 F.3d 1325, 1332 (Fed. Cir. 1998) 

(quoting C.R. Bard, Inc. v. Advanced Cardiovascular, Inc., 911 F.2d 670, 672 (Fed. Cir. 

1990)).

246. http://www.patentlyo.com/media/docs/2011/09/raderstateofpatentlit.pdf

at 6.
V. Summary Judgment Motions

69

make the case more amenable to early settlement. Early, candid communications between counsel and the court—starting as early as the initial status conference—can help identify 

opportunities for streamlining a case through early summary 

judgment.247

Courts ordering or permitting early summary judgment 

motions must, of course, be mindful of Rule 56(d), which allows the court to deny summary judgment (or defer ruling on 

the motion) when the nonmoving party “shows by affidavit or 

declaration that, for specified reasons, it cannot present facts 

essential to justify its opposition.”248 Effective use of early 

summary judgment motions on damages issues thus may require careful case management to ensure that the nonmoving 

party has the opportunity to obtain discovery necessary to 

respond to the motion.

Even where a case is not amenable to an early summary 

judgment motion, delaying resolution of summary judgment 

motions until the eve of trial is inefficient for both the parties 

and the court. It is best to resolve summary judgment motions well in advance of the final pretrial conference (indeed, 

well in advance of the meetings of counsel that typically precede the final pretrial conference), so that the court and the 

parties can prepare their pretrial submissions and prepare 

for trial knowing precisely what issues must be tried.

 

247. See, e.g., Adjustacam L.L.C. v. Amazon.com Inc., No. 6:10-cv-329, ECF No. 

426 (E.D. Tex. Apr. 27, 2011) (where parties agreed in early status conferences that 

discovery would focus principally on damages and defendants suggested that an 

early summary judgment motion on pre-suit damages and laches would narrow the 

number of accused products and position the case for settlement, trial court ordered 

exchange of limited damages disclosures on marking, the number of accused devices 

sold, and resulting revenues, and agreed to hear early summary judgment motion on 

laches and pre-suit damages issues); N. Am. Philips Corp. v. Am. Vending Sales Inc., 

No. 1:93-cv-03261, ECF No. 168 (N.D. Ill. Nov. 12, 1993) (noting that determination of 

marking and notice issues may resolve the entire action, court ordered initial discovery limited to marking, notice, and identification of accused products and allegedly 

infringed claims and permitted early motions for summary judgment on marking and 

notice at conclusion of the initial discovery).

248. Fed. R. Civ. P. 56(b).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

70

B. Potential Damages Issues Amenable to Summary 

Disposition

There are damages-related issues that may not depend on expert testimony, and it is often best to resolve such issues as 

early as possible since they can affect not only a damages expert’s analysis but also the settlement posture of a case. 

Where it is possible to do so, addressing such issues before 

the exchange of expert reports can yield significant efficiencies and cost savings.

One issue that sometimes is amenable to an early summary judgment ruling is the date on which the infringement 

damages began to accrue. Pre-issuance damages may begin 

to accrue as early as the publication date of the patent application, even though the patent may issue years later.249 Conventional patent damages begin to accrue at 12:01 a.m. on the 

date the patent issues and stop accruing no later than midnight on the day the patent expires. When only method claims 

are asserted, or when no product embodying the patent 

claims has been commercialized, damages may accrue from 

the beginning of infringement or the issuance of the patent, 

whichever is later.250 Under § 287, recoverable damages for 

patented articles may be limited in the event the patentee or 

its licensee has not given either actual notice of the patent or 

constructive notice of the patent through the marking of 

 

249. 35 U.S.C. § 154(d). To qualify for provisional damages, the claim scope of 

the issued patent must be substantially identical to that of the published application, 

and the issue whether the claim scope is substantially identical is amenable to summary judgment. See Baseball Quick, LLC v. MLB Advanced Media L.P., No. 1:11-cv1735, ECF No. 194, slip op. at 35–45 (S.D.N.Y. July 25, 2014) (granting summary judgment of no provisional damages because patent claim scope not substantially identical to that of published application). The award of pre-issuance damages under 35 

U.S.C. § 154(d) requires “actual notice” of the published application that led to the 

asserted patent. Rosebud LMS Inc. v. Adobe Sys. Inc., 812 F.3d 1070, 1073–74 (Fed. 

Cir. 2016) (granting summary judgment of no damages for lack of “actual notice” but 

noting that “actual notice” may be established by the patentee affirmatively providing notice or by the accused infringer obtaining knowledge, but not by constructive 

notice).

250. See, e.g., Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1082–83 (Fed. 

Cir. 1983).
V. Summary Judgment Motions

71

products made, used, imported, offered for sale, or sold under the asserted patent. Constructive notice requires the patentee or its licensees to mark their own products embodying 

the patented technology with the patent number, and the burden of establishing notice rests with the patentee.251

It is not unusual for disputes to arise relating to notice. 

Such issues can be narrow legal issues amenable to resolution 

on summary judgment. For example, the parties may dispute 

whether marking was required at all, given the nature of the 

asserted and non-asserted claims in the patent-in-suit. Disputes also may arise concerning the date on which notice was 

given. Where the infringement is ongoing, notice always will 

have been given no later than upon the filing of the action. 

Similarly, because the marking requirement is not absolute, 

disputes often arise concerning the nature and extent of the 

marking used, and whether such marking has been “substantially consistent and continuous.” This is particularly so 

where the patent has been licensed and the required marking 

was performed by others acting under the patentee’s authority.

Disputes regarding the existence of actual or constructive 

notice may be particularly susceptible to resolution by summary judgment, because there typically is little or no need for 

the patentee to obtain discovery from the accused infringer 

on the issue because “[t]he correct approach to determining 

notice under section 287 must focus on the action of the patentee, not the knowledge or understanding of the infringer.”252 Because the patentee bears the burden of showing 

either compliance with the marking statute or actual notice, 

and it has at its disposal the information regarding its own 

actions, the issue may be ripe for decision at an early stage, 

unless there is a genuine issue of material fact regarding the 

 

251. See generally Rembrandt Wireless Techs., LP v. Samsung Elecs. Co., No. 

2016-1729 (Fed. Cir. Apr. 17, 2017).

252. Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 

1994).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

72

patentee’s marking practices or the infringer’s receipt of actual notice. For example, if the patentee is unable to marshal 

evidence showing that its marking, and the marking by its licensees, has been “substantially consistent and continuous,”253 summary judgment can appropriately limit the damages period.254 An early decision defining the damages period 

allows the parties’ experts to properly focus their opinions 

and also can streamline discovery, e.g., by limiting discovery 

of product sales to only the relevant time period.255

Summary judgment also may be appropriate to eliminate 

a theory for calculating damages that is unsupported by the 

evidence. For example, the availability of lost profits is a question of law.256 As noted in section I.B.1 above, under the generally accepted test for lost profits a patentee must show 

(1) demand for the patented product, (2) absence of acceptable noninfringing alternatives, (3) manufacturing and marketing capability to exploit the demand, and (4) the amount of 

profit it would have made.257 The evidence may establish unambiguously the existence of noninfringing alternatives or 

the inability of the patentee to manufacture beyond a certain 

capacity. In such cases, summary judgment may be used to 

limit or eliminate the availability of lost profits as a damages 

theory.258 Similarly, where lost sales would have been made 

 

253. Id.

254. See, e.g., Extreme Networks, Inc. v. Enterasys Networks, Inc., 558 F. Supp. 

2d 909, 918 (W.D. Wis. 2008).

255. Information that precedes the date that damages start may be relevant. For 

instance, the hypothetical negotiation may precede the date of actual or constructive 

notice. Access to “pre-infringement” revenue and profit data can improve the quality 

of the damages analysis by providing a perspective on the pre-infringement world.

256. Poly-Am., L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004). 

The underlying economic analysis is, however, often disputed.

257. See Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th 

Cir. 1978). The Federal Circuit has endorsed this test as one way to show lost profits 

damages. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1548 (Fed. Cir. 1995).

258. This presumes that the patent owner has not employed an alternative 

methodology to address such factors, such as a market share analysis to overcome 

the presence of noninfringing alternatives, see State Indus., Inc. v. Mor-Flo Indus., 

Inc., 883 F.2d 1573, 1577 (Fed. Cir. 1989), or consideration of the investment required 

to expand manufacturing capability to address capacity constraint.
V. Summary Judgment Motions

73

by the patentee’s corporate affiliate, the patentee may be unable to establish that the affiliate’s profits in turn would have 

become the patentee’s profits. In such cases, summary judgment could remove the lost profits theory from the case.259

Summary judgment may be used to address other damages theories. As explained in section I.B.3 above, a patentee 

seeking to recover damages under the entire market value 

rule must show that the patented technology is the basis for 

customer demand. Without a sufficient evidentiary nexus between the patented technology and customer demand, summary judgment can remove the entire market value theory 

from the case.260

Where damages are calculated as a reasonable royalty, 

the parties often disagree over the proper royalty base. Such 

a dispute often takes one of two forms: (1) the patentee makes 

an accusation of infringement against a component of, or an 

improvement to, a larger infringing system but seeks a royalty 

base that includes the entire system; or (2) the patentee seeks 

to include products sold in connection with the infringing 

product (allegedly collateral sales) in the royalty base. Some 

parties attempt to address this dispute through a motion in 

limine (to preclude the patentee from presenting evidence 

concerning damages based on the entire system or on collateral sales), others through a Daubert challenge (to exclude 

the expert through whom the theory will be presented).261 It 

may be more appropriate to posit the issue as whether the 

patentee has a legal basis for seeking damages that extend 

beyond the infringing component, product, or method. Where 

the facts have been developed through discovery, it may be 

 

259. See Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1367 (Fed. Cir. 2008).

260. Cf. Lucent Techs. Inc. v. Gateway, Inc., 509 F. Supp. 2d 912, 935 (S.D. Cal. 

2007) (granting new trial on damages where the evidence failed “to establish that the 

patented features themselves produced any customer demand or value of the product”). In Cornell University v. Hewlett-Packard Co., No. 01-CV-1974, 2008 U.S. Dist. LEXIS 

41848 (N.D.N.Y. May 27, 2008), the court addressed this issue on a Daubert-type challenge during trial.

261. See Patent Management Guide, supra note 2, at § 7.4.2.
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

74

possible to address this issue on summary judgment.262 Because the royalty base is a key input to an expert’s damages 

calculation, the issue should be addressed sufficiently ahead 

of trial so that, if necessary, the experts can conform their 

opinions to the summary judgment ruling.

Recent district court orders suggest other potential bases 

for damages-related summary judgment motions, including 

the date of the hypothetical negotiation,263 accused acts performed outside the United States,264 profits made by other entities,265 convoyed sales,266 and the application of hedonic regression.267 Other damages-related topics that may be the 

subject of an early summary judgment motion may include 

damages accrued before issuance of the patent,268 before issuance of a reexamination certificate,269 or after a patent 

 

262. See id.

263. See, e.g., Boston Sci. Corp. v. Cordis Corp., 777 F. Supp. 2d 783, 792 (D. Del. 

2011) (denying accused infringer’s motion for summary judgment regarding date of 

hypothetical negotiation and sua sponte granting patentee partial summary judgment on the proper date of the hypothetical negotiation).

264. See, e.g., In re Papst Licensing GmbH & Co. KG Lit., No. 1:07-MC-493, ECF 

No. 520 (D.D.C. Nov. 20, 2012) (granting summary judgment on products never made, 

used, sold, offered for sale or imported in/into the United States); Yangaroo Inc. v. 

Destiny Media Techs. Inc., 720 F. Supp. 2d 1034, 1037–38 (E.D. Wis. 2010) (granting 

summary judgment of noninfringement where accused acts performed in part outside the United States).

265. See, e.g., Carver v. Velodyne Acoustics, Inc., 202 F. Supp. 2d 1147, 1149 (W.D. 

Wash. 2002) (granting defendant summary judgment that patentee plaintiff could not 

recover lost profits of nonparty manufacturing company she owned).

266. See, e.g., Carefusion 303, Inc. v. Sigma Int’l, No. 10-cv-442, ECF No. 92 (S.D. 

Cal. Jan. 3, 2012) (granting summary judgment of no convoyed sales).

267. Stragent, LLC v. Intel Corp., No. 6:11-cv-421, 2014 U.S. Dist. LEXIS 106167, 

slip op. at *11–18 (E.D. Tex. Mar. 6, 2014) (granting motion to exclude testimony 

based on the results of hedonic regression analysis because opinion “lacks the ‘valid 

scientific connection to the pertinent inquiry’ that is required ‘as a precondition to 

admissibility’ under Rule 702”).

268. See, e.g., LIVJO Inc. v. Deckers Outdoor Corp., No. 2:10-cv-4557, ECF No. 116 

(C.D. Cal. Sept. 27, 2011) (granting summary judgment that patentee cannot recover 

pre-issuance damages).

269. See, e.g., eBay Inc. v. PartsRiver Inc., No. C10-04947, ECF No. 46 (N.D. Cal. 

May 9, 2011) (granting summary judgment; no damages for alleged infringement prior 

to issuance of reexamination certificate because reexamined claims are substantively different); Irrevocable Trust of Anthony J. Antonious v. Roger Cleveland Golf 

Co., No. 8:10-cv-01198, ECF No. 36 (C.D. Cal. Jan. 11, 2011) (same).
V. Summary Judgment Motions

75

expires;

270 lack of an acceptable noninfringing substitute,271

laches;

272 prosecution history laches;273 the availability of enhanced damages;

274 and even the amount of lost profits damages.275 In other words, there are potentially many areas in 

which early, focused summary judgment motions can either 

better position the case for resolution or, at least, more narrowly frame the damages issues for trial.

 

270. See, e.g., In re Katz Interactive Call Processing Patent Lit., No. 2:07-ML-1816-

B, ECF No. 706 (C.D. Cal. Feb. 21, 2013) (granting summary judgment of no damages 

after patent expiration).

271. See, e.g., Micro Chem., Inc. v. Lextron, Inc., 161 F. Supp. 2d 1187, 1190 (D. 

Colo. 2001) (granting summary judgment of no lost profits because of the existence 

of an acceptable noninfringing substitute); AMP Inc. v. Lantrans Inc., 22 U.S.P.Q.2d 

1448 (C.D. Cal. 1991) (granting summary judgment of no acceptable noninfringing 

substitutes).

272. See, e.g., Nordock Inc. v. Sys. Inc., 927 F. Supp. 2d 577, 606–08 (E.D. Wis. 

Feb. 26, 2013) (granting patentee summary judgment on laches, equitable estoppel 

and unclean hands defenses).

273. See, e.g., In re Katz Interactive Call Processing Patent Lit., 882 F. Supp. 2d 

1123, 1149 (C.D. Cal. 2010) (granting summary judgment of no prosecution history 

laches).

274. See, e.g., Seirus Innovative Accessories Inc. v. Cabela’s Inc., No. 9-cv-102, 

ECF No. 367 (S.D. Cal. Oct. 5, 2011).

275. See, e.g., AMP, 22 U.S.P.Q.2d at 1448 (granting summary judgment of lost 

profits damages).
Compensatory Damages Issues in Patent Infringement Cases, Second Edition

76

VI. Pretrial Case Management

A. Pretrial Conference and Order

The complexity of patent cases underscores the importance 

of careful pretrial preparation by both the parties and the 

court. One of the keys to a well-prepared trial is a comprehensive final pretrial conference and order. “The pretrial conference represents the final opportunity to anticipate and resolve problems that would otherwise interrupt and delay trial 

proceedings.”276 In patent cases, the pretrial conference offers 

the court a valuable opportunity to resolve disputes about 

how damages issues will be presented to the jury and to ensure a more effective presentation of the evidence. In cases in 

which damages issues are complex, it may even make sense 

to convene a separate, “preliminary” pretrial conference focused solely on damages. The agenda for such a conference 

might include which measures of damages may be argued to 

the jury or which Georgia-Pacific factors will be included in 

the jury instructions.277

The pretrial conference (or conferences) should be held 

after dispositive motions have been ruled upon, so the court 

and the parties know the contours of the issues that are to be 

tried. The goal of the pretrial conference process is a comprehensive final pretrial order that “will govern the issues for 

trial and establish the ground rules for the conduct of the 

trial.”278 The conference should be preceded by compulsory 

meetings between the parties on a host of topics typically 

defined by the court in its local rules or standing order. The 

“meet and confer” process allows the parties to identify areas 

of agreement that can be incorporated into a joint proposed 

 

276. Patent Management Guide, supra note 2, at 7-2.

277. Only the relevant Georgia-Pacific factors should be included in the instructions. Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc. (“CSIRO”), 809 

F.3d 1295, 1303 (Fed. Cir. 2015).

278. Patent Management Guide, supra note 2, at 7-3.
VI. Pretrial Case Management

77

pretrial order and to identify areas of dispute, which then can 

be briefed to the court.

Among the most common subjects for the pretrial meet 

and confer and submissions are witness lists, exhibit lists, 

and jury instructions. Standard jury instructions on damages 

are often fairly barebones,279 and it is not uncommon for one 

or both of the parties to seek to modify or expand upon them. 

To the extent either party believes special jury instructions 

are required on damages issues, such instructions ideally are 

addressed within the procedure and timetable set by the 

court for exchange of proposed jury instructions and submission of disputed proposed instructions to the court. Sometimes, the need for special or modified jury instructions will

become clearer as the evidence comes in. In that event, parties may request further modifications to the jury instructions 

as trial progresses, and the court should entertain such requests as appropriate. For example, one damages instruction 

issue that often arises is whether to instruct the jury on all 

fifteen Georgia-Pacific factors, where the evidence at trial does 

not relate to or support all of the factors. To avoid jury confusion, courts should limit jury instructions to those GeorgiaPacific factors that are supported by sufficient record evidence. In accordance with Rule 51, the basis for any objections, and for the court’s rulings thereon, should be preserved on the record for later reference by the court or on 

appeal.

As explained below, in limine motions—including those 

addressed to damages issues—should be heard no later than 

the final pretrial conference, and it is preferable for Daubert

challenges to be determined even earlier. To the extent other 

damages issues are likely to arise at trial, such issues at least 

should be identified—and, ideally, briefed and determined—

at the final pretrial conference.

 

279. See, e.g., Model Patent Instructions, supra note 3, 6.1–6.6.
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B. Challenges to Expert Testimony Regarding Damages

1. The Court’s Gatekeeper Role and Rule 702 Challenges 

“Critical to managing a patent trial is the court’s ability to control expert testimony.”280 No issue in a patent trial requires 

application of the gatekeeping tools of Federal Rule of Evidence 702281 more than damages. Courts and parties are readily familiar with the requirement that a patent damages expert

analysis (like any other expert opinion) must be relevant and 

“requires sound economic and factual predicates.”282 But patent damages experts necessarily are applying scientific, 

technical, or specialized knowledge to evaluate a hypothetical legal construct, such as the royalty rate the patentee and 

the infringer would have agreed upon had they participated 

in a negotiation at the time before the first infringement knowing that the patent was valid and infringed.283 And that analysis may not take the form of an accepted scientific methodology applied outside the litigation context or be presented in 

the form of a generally accepted methodology supported by 

 

280. Patent Management Guide, supra note 2, at 7-17.

281. See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597 (1993) (“[T]he 

Federal Rules of Evidence . . . —especially Rule 702—do assign to the trial judge the 

task of ensuring that an expert’s testimony both rests on a reliable foundation and is 

relevant to the task at hand.”). Many authorities use “Daubert” as shorthand for the 

Rule 702 analysis, but that case has been limited in part by subsequent case law and 

revision of Rule 702. See Fed. R. Evid. 702 advisory committee’s note to 2000 amendment. In Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1295 (Fed. Cir. 2015), the 

Federal Circuit echoed Daubert’s observation that the focus of the court’s inquiry 

into the relevance and reliability of the expert’s testimony “must be solely on principles and methodology, not on the conclusions that they generate,” Daubert, 509 U.S. 

at 595, an observation that must be tempered by the Joiner Court’s explanation that 

“conclusions and methodology are not entirely distinct from one another,” Gen. Electric Co. v. Joiner, 522 U.S. 136, 146 (1997), and the subsequent revision of Rule 702 to 

include subsection (d). See Fed. R. Evid. 702 advisory committee’s note to 2000 

amendment. See Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1372 (Fed. 

Cir. 2017) (“the federal law of evidence is now embodied in the Federal Rules of Evidence, not in earlier Supreme Court decisions except to the extent they are actually 

reflected in the rules”). 

282. Integra Life Sciences I, Ltd. v. Merck KgaA, 331 F.3d 860, 870 (Fed. Cir. 2003); 

Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1311 (Fed. Cir. 2002).

283. Patent Management Guide, supra note 2, at 7-17 to 7-18.
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peer-reviewed publications. Application of the Rule 702 analysis to this kind of expert testimony may prove challenging 

but is nonetheless important.284

Challenges to expert testimony on patent damages can focus on any one or more of Rule 702’s “three distinct but related requirements: (1) the subject matter at issue must be 

beyond the common knowledge of the average layman; 

(2) the witness must have sufficient expertise; and (3) the 

state of the pertinent art or scientific knowledge permits the 

assertion of a reasonable opinion.”285 Although the patent 

statute authorizes the court to “receive expert testimony as 

an aid to the determination of damages or of what royalty 

would be reasonable under the circumstances,”286 patent 

damages is not necessarily a subject beyond the knowledge 

of the average layman, especially if the parties simply and 

clearly “show the value [of what was taken] by proving what 

would have been a reasonable royalty, considering the nature 

of the invention, its utility and advantages, and the extent of 

the use involved.”287

 

284. See Riles, 298 F.3d at 1311; Shockley v. Arcan, Inc., 248 F.3d 1349, 1363 (Fed. 

Cir. 2001) (rejecting as “without any basis in economic reality” expert testimony 

based on the number of sales patentee told him to assume); Utah Med. Prods., Inc. v. 

Graphic Controls Corp., 350 F.3d 1376, 1385 (Fed. Cir. 2003) (affirming Daubert ruling 

excluding as irrelevant “expert testimony and evidence of license agreements . . . 

asserted to support a reasonable royalty model of damages”).

285. United States v. Finley, 301 F.3d 1000, 1007 (9th Cir. 2002); Fed. R. Evid. 702.

286. 35 U.S.C. § 284.

287. Dowagiac Mfg., Co. v. Minn. Moline Plow Co., 235 U.S. 641, 647 (1915). Although the Federal Circuit has emphasized that expert damages testimony is not required, Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1382 (Fed. Cir. 2003) (holding that “district court erred in concluding that Dow did not carry its burden to establish damages because it failed to provide expert testimony on the damages issue” 

and stating “section 284 is clear that expert testimony is not necessary to the award 

of damages, but rather may be received as an aid”), where a party presents a complex damages case premised, for example, on the full panoply of Georgia-Pacific factors, one district court observed that a damages case should not be put to a jury 

through percipient witnesses “testifying to the wrong time period,” with “no rationale to support its suggested reasonable royalty calculation,” without “either 

clear guidance from an expert about how to apply complex calculations or simple 
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The qualifications analysis focuses on the witness’s 

“knowledge, skill, experience, training or education” as it relates to the subject matter of the proposed testimony. That a 

witness is an accountant or an economist does not necessarily qualify him or her to testify on patent infringement 

damages in general or on damages in a particular patent infringement case.288 The qualifications inquiry is by definition 

fact-specific, and “the court will need to resolve this issue on 

a case-by-case basis, above all applying its common sense to 

determine whether the expert has sufficient foundation to offer the opinions in question.”289

That the witness has the knowledge, skill, experience, 

training, or education to qualify as an expert in a given field 

does not mean that his or her expertise is relevant to the patent infringement damages. The witnesses’ “scientific, technical, or other specialized knowledge” must be such that it 

would “help the trier of fact to understand the evidence or to 

determine a fact in issue.”290 A corollary to this requirement 

 

factual proofs about what [the] patentee has previously accepted in factually analogous licensing situations.” Unicomm Monitoring, LLC v. Cencom, Inc., No. 16-cv-1166, 

2013 U.S. Dist. LEXIS 56351, at *24–26 (D.N.J. 2013).

288. Cf. Monsanto Co. v. McFarling, 488 F.3d 973, 981 (Fed. Cir. 2007) (no abuse of 

discretion in failing to exclude testimony of damages expert who, although neither a 

farmer nor an agronomist, was a certified valuation analyst, because his 

qualifications “go to whether the jury should believe the witness or credit his testimony, instead of whether the opinions have a reasonable basis or meet the Daubert

requirements”).

289. Patent Management Guide, supra note 2, at 7-29.

290. Fed. R. Evid. 702(a). “Whether the situation is a proper one for the use of 

expert testimony is to be determined on the basis of assisting the trier,” the rule’s 

commentary explains, “[t]here is no more certain test for determining when experts 

may be used than the common sense inquiry whether the untrained layman would 

be qualified to determine intelligently and to the best possible degree the particular 

issue without enlightenment from those having a specialized understanding of the 

subject involved in the dispute,” and “[w]hen opinions are excluded, it is because 

they are unhelpful and therefore superfluous and a waste of time.” Fed. R. Evid. 702 

advisory committee’s notes on proposed rules. Although experience alone may qualify a witness as an expert under Rule 702, “[i]f the witness is relying solely or primarily on experience, then the witness must explain how that experience leads to the 

conclusion reached, why that experience is a sufficient basis for the opinion, and 
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is imposed by Rule 403, which allows a court to “exclude relevant evidence if its probative value is substantially outweighed by a danger of . . . unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting evidence.”291 In this regard, courts have excluded, for example, consideration of the entire market value 

of accused products for infringement of patents on minor improvements.292

The reliability analysis itself breaks down into three components.293 First, the testimony must be “based on sufficient 

facts or data.”294 That is, the data itself must be reliable.295

Courts should exclude damages expert testimony that is 

“conjectural or speculative.”296

 

how that experience is reliably applied to the facts. The trial court’s gatekeeping 

function requires more than simply ‘taking the expert’s word for it.’” Id. 

291. Fed. R. Evid. 403.

292. See Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1320–21 (Fed. Cir. 

2011); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009).

293. Daubert, 509 U.S. at 592–93; Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 

(1999); Summit 6, 802 F.3d at 1295; Fed. R. Evid. 702 advisory committee’s notes to 

2000 amendments. See Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 

711 F.3d 1348, 1374 (Fed. Cir. 2013) (“unreliable testimony frustrates a primary goal 

of expert testimony,” which is “to place experience from professional specialization 

at the jury’s disposal, not muddle the jury’s fact-finding with unreliability and speculation”).

294. Fed. R. Evid. 702(b).

295. See Power Integrations, 711 F.3d at 1373 (excluding damages expert testimony “derived from unreliable data and built on speculation”; although expert’s data 

need not be admissible, “the data cannot be derived from a manifestly unreliable 

source”).

296. Westinghouse Elec. & Mfg. Co. v. Wagner Elec. & Mfg. Co., 225 U.S. 604, 615 

(1912). See also Whitserve, LLC v. Comput. Packages, Inc., 694 F.3d 10, 29, 33 (Fed. 

Cir. 2012) (analysis by damages expert does not support verdict because his testimony was “conclusory, speculative, and, frankly, out of line with economic reality”; 

multiple errors in expert’s “royalty rate calculation cause his ultimate opinion regarding a reasonable royalty to be speculative”); Wordtech Sys., Inc. v. Integrated 

Networks Solutions, Inc., 609 F.3d 1308, 1319–22 (Fed. Cir. 2010) (reversing verdict 

and remanding for new damages trial because verdict clearly was not supported by 

the evidence and was “based only on speculation and guesswork”); Del Mar Avionics, 

Inc. v. Quinton Instr. Co., 836 F.2d 1320, 1327 (Fed. Cir. 1987) (“damages may not be 

determined by mere speculation or guess”) (citing Story Parchment Co. v. Paterson 

Parchment Paper Co., 282 U.S. 555, 563 (1931)).
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Second, the testimony must be “the product of reliable 

principles and methods.”297 Although lack of reliability has 

been the basis for excluding expert testimony in the lost 

profits context,298 reliability issues arise most often in connection with the determination of a reasonable royalty, which 

can be based on a complex, multi-factored framework that is 

subject to widely differing interpretation and, sometimes, 

misuse or abuse by parties and their experts. Common mistakes include mischaracterization or conclusory application 

of the Georgia-Pacific factors, use of a legally incorrect (or unarticulated) hypothetical negotiation date, or a legally erroneous theory.299

Third, the expert must have “reliably applied the principles and methods to the facts of the case.”300 This requirement differs from the requirement for sufficient facts or data 

in that it addresses, for example, reliance on assumptions not 

properly grounded in facts, such as “evidence unrelated to 

the claimed invention” (noncomparable license agreements301

 

297. Fed. R. Evid. 702(c).

298. See DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1309 (Fed. Cir. 2006) (“While 

damages analysis invariably involves hypothetical reconstruction of a ‘but for’ marketplace, that reconstruction must include some footing in economic principle.”).

299. For example, in VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326–29 (Fed. 

Cir. 2014), the expert’s opinion relied on the accused device’s entire value as the 

royalty base without further apportionment to the patented feature because it was 

the “smallest salable patent practicing unit”—this was compounded by a jury instruction to the same effect, resulting in reversible error. 

300. Fed. R. Evid. 702(d).

301. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1327 (Fed. Cir. 2009) 

(rejecting reliance on agreements “radically different from the hypothetical agreement under consideration”); ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 870–72

(Fed. Cir. 2010) (rejecting reliance on noncomparable license agreements because 

“evidence unrelated to the claimed invention does not support compensation for infringement, but punishes beyond the reach of the statute”); see also Wordtech, 609 

F.3d at 1319–21.
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and rules of thumb302), and inappropriate use of facts, for example, facts that post-date the hypothetical negotiation.303 In 

such cases, “[a] court may conclude that there is simply too 

great an analytical gap between the data and the opinion proffered.”304

Courts should perform their gatekeeping role under Federal Rule of Evidence 702 to ensure that the legal standards 

are properly applied and improper damages testimony does 

not infect the trial.305 Before admitting expert testimony, the 

trial court must make “a preliminary assessment of whether 

the reasoning or methodology underlying the testimony is 

scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue.”306 The 

 

302. For example, in Uniloc, 632 F.3d at 1317, the Federal Circuit rejected the “25 

percent rule of thumb as an abstract and largely theoretical construct” that says 

nothing “about a particular hypothetical negotiation or reasonable royalty involving 

any particular technology, industry, or party.” The Uniloc court explained that “[t]o 

be admissible, expert testimony opining on a reasonable royalty rate must ‘carefully 

tie proof of damages to the claimed invention’s footprint in the market place.’” Id. 

Likewise, in VirnetX, 767 F.3d at 1331–34, the Federal Circuit rejected application of a 

50/50 split of incremental profits under the guise of the Nash Bargaining Solution as 

“without sufficiently establishing that the premises of the theorem actually apply to 

the facts of the case at hand.”

303. Patent Management Guide, supra note 2, at 7-29 to 7-30. Another example of 

the inappropriate use of facts pertains to conjoint surveys used to identify the market’s willingness to pay for the patented feature in a multifeature product where the 

subject of the survey is an overbroad characterization of the patented feature. Although framing of survey questions, like other challenges to survey methodology, is 

generally an issue of weight rather than admissibility, “there must be some outer 

limits to this principle,” and “[a]t some point, a description of a patent [claim] in a 

survey may vary so much from what is claimed that the survey no longer ‘relate[s] 

to any issue in the case,’” “is not relevant and, ergo, non-helpful,” and “may be so 

confusing to the jury as to substantially outweigh the survey’s probative value, thus 

requiring the Court to exclude such material under Rule 403.” Apple, Inc. v. Samsung 

Elecs. Co., No. 12-cv-630, 2014 WL 794328, at *18 (N.D. Cal. 2014) (dicta); accord Sentius Int’l, LLC v. Microsoft Corp., No. 5:13-cv-825, 2015 WL 331939, at *3 (N.D. Cal. 

2015) (dicta).

304. Joiner, 522 U.S. at 146.

305. See, e.g., Integra, 331 F.3d at 871–72 (reversing denial of JMOL on reasonable 

royalty where record was not clear on date of first infringement).

306. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592–93 (1993).
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Federal Circuit has made clear, however, that this gatekeeping function does not amount to an “independent mandate” 

for courts to exclude evidence where the parties have asserted no objection, and that “[t]he responsibility for objecting to evidence . . . remains firmly with the parties.”307 Nor 

does the court’s gatekeeping function extend beyond the expert’s reasoning and methodology to correctness of the data 

used or the weight of the evidence.308 “[W]hether the expert 

is credible . . . is generally a question for the fact finder, not 

the court.”309 “Vigorous cross-examination, presentation of 

contrary evidence, and careful instruction on the burden of 

proof are the traditional and appropriate means of attacking 

shaky but admissible evidence.”310

2. Procedures and Timing for Rule 702 Challenges

The party offering the expert has the burden of establishing 

that Rule 702 is satisfied.311 This burden must be carried by a 

preponderance of the evidence.312

The effectiveness of the court’s performance of its gatekeeping role depends in large part on when and how it 

chooses to perform that role. The court has considerable discretion to determine how it will perform its function under 

Rule 702, including determining whether (and when) to use 

 

307. Lucent, 580 F.3d at 1325 (rejecting argument that court “abdicated” gatekeeping role by not excluding damages evidence to which no objection was made at 

trial; “[a]ny implicit objection on appeal is deemed waived by failing to object at 

trial”).

308. See, e.g., i4i Ltd. P’ship v. Microsoft Corp., 589 F.3d 1246, 1271 (Fed. Cir. 

2009) (“Under Rule 702, the question is whether the expert relied on facts sufficiently 

related to the disputed issue,” and “it is not the district court’s role under Daubert to 

evaluate the correctness of facts underlying an expert’s testimony.”); Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1221 (Fed. Cir. 2006) (“challenge [to inaccurate data] goes to the weight of the evidence rather than the admissibility”). 

309. Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1296 (Fed. Cir. 2015).

310. Daubert, 509 U.S. at 596; Rembrandt Wireless Techs., LP v. Samsung Elecs. 

Co., No. 2016-1729, slip op. at 16–17 (Apr. 17, 2017).

311. Daubert, 509 U.S. at 592 n.10.

312. Id.
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special briefing or other procedures.313 In making decisions 

about the timing and procedure it will use, the court should 

ensure that it has sufficient time and evidence to thoroughly 

perform “the task of ensuring that an expert’s testimony both 

rests on a reliable foundation and is relevant to the task at 

hand.”314 A common method for fulfilling this function is a 

Rule 702 hearing, at which the court has the opportunity to 

hear directly from the challenged witness, although such a 

process is not specifically mandated.315

Rule 702 challenges frequently are raised as a companion 

to a summary judgment motion or in the form of an in limine 

motion. But collapsing the Rule 702 analysis into the court’s 

consideration of dispositive motions (which often are complex enough to require substantial briefing) or in limine motions (which typically are short, discrete motions on simple 

evidentiary disputes shortly before trial) may not allow the 

care and attention such an analysis warrants.

316 Establishing 

and scheduling a separate mechanism for addressing Rule 

702 challenges can help ensure that the court has sufficient 

 

313. See Kumho Tire, 526 U.S. at 152 (“The trial court must have [discretionary] 

latitude in deciding how to test an expert’s reliability, and to decide whether or when 

special briefing or other proceedings are needed to investigate reliability . . .”) (emphasis in original); Fed. R. Evid. 702 advisory committee’s notes to 2000 amendment 

(Rule 702 “makes no attempt to set forth procedural requirements for exercising the 

trial court's gatekeeping function over expert testimony,” and “[c]ourts have shown 

considerable ingenuity and flexibility in considering challenges to expert testimony 

under Daubert.”).

314. Daubert, 509 U.S. at 597.

315. See Hynes v. Energy West, Inc., 211 F.3d 1193, 1203–04 (10th Cir. 2000) (district court held hearing); see also United States v. Charley, 189 F.3d 1251, 1266 (10th 

Cir. 1999) (district court granted great latitude in “deciding whether to hold a formal 

hearing”); United States v. Call, 129 F.3d 1402, 1405 (10th Cir. 1997) (noting that Daubert does not require a hearing).

316. “One problem with addressing Daubert issues as part of summary judgment 

or in limine briefing is that neither provides an adequate means for fleshing out the 

record on the factual and legal issues relevant to the sufficiency of expert testimony. 

Summary judgment briefing is inadequate for this purpose because there is little 

overlap between either the facts or the legal standards for deciding summary judgment and Daubert issues. And because both issues are substantial, there typically is 

not room in a summary judgment brief to do justice to both. The Daubert challenge 

usually gets short shrift . . . .” Patent Management Guide, supra note 2, at 7-25.
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information and opportunity to make a thorough and accurate evaluation of the reliability of an expert’s opinion. Moreover, summary judgment and in limine briefing often occurs 

shortly before trial. Earlier determination of Rule 702 challenges to damages experts can significantly alter the settlement dynamics of a case and perhaps make an early settlement more likely, saving the parties significant expense. 

Moreover, the consequences of an order excluding all or part 

of an expert’s testimony, close to trial, can be very prejudicial. Accordingly, courts should consider scheduling the Rule 

702 briefing and (if one is held) hearing it earlier rather than 

later in the life of a case. At minimum, courts should consider 

separating the Rule 702 briefing from briefings on summary 

judgment and in limine motions. Courts also may consider 

conducting a preliminary pretrial conference devoted exclusively to damages issues, as suggested above.317

Courts may decide to “carry” a Rule 702 motion until the 

witness is to be presented at trial or until the court is called 

upon to exercise its gatekeeping function in response to an 

objection at trial. Trial courts have discretion to conduct a 

Rule 702 hearing during trial before an expert witness testifies, which may have the benefit of allowing the court to consider the proffered testimony in context.318 Doing so, however, may as a practical matter limit the time available to the 

court to hear and decide the issue, and courts should consider “the realities of a multi-week jury trial where . . . convening a Daubert hearing while the jury potentially [sits] idle for 

a few days would severely interrupt the presentation of [a 

 

317. Id.

318. See, e.g., Hiscox Dedicated Corp. Member, Ltd. v. Matrix Grp. Ltd., Case No. 

8:09-cv-2465-T-33AEP, 2011 BL 239310 (M.D. Fla. Sept. 19, 2011); Mosley v. Waffle 

House, Inc., No. 1:04CV816LG-RH, 2006 BL 50552 (S.D. Miss. Apr. 14, 2006) (“the Court 

will conduct a Daubert hearing during trial and will determine at that time whether 

[the witness’s] testimony should be excluded”).
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party’s] case and substantially interfere with the jury’s ability 

to stay engaged in the proceeding.”319

A court’s gatekeeping function also may be invoked in 

posttrial motions, although it is preferable for the court to establish a process that permits the reliability of the experts’ 

opinions to be fully evaluated and determined before the evidence is admitted at trial.320

3. Effect of a Successful Rule 702 Challenge: Do-Over?

Where a court has excluded some or all of a damages expert’s 

opinion for failing to meet the Daubert standards, the question often arises whether the court will permit the party and 

its expert to “repair the record” by submitting a new damages 

report or by offering a new damages theory or methodology 

at trial. Whether to allow this falls within the court’s broad 

discretion.321 A number of factors may be relevant to the 

 

319. United States v. Neuman, No. 3:11-CR-00247-BR, 2013 BL 298309 (D. Or. 

Oct. 28, 2013) (rejecting defendants’ late disclosure and offer of expert witness testimony during trial despite offer to “[break] for a Daubert hearing”).

320. See, e.g., Cornell Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d 279, 279

(N.D.N.Y. 2009). In Cornell, the court interrupted the trial to conduct a Rule 702 hearing; found that the patentee’s damages expert had not properly applied the entire 

market value rule and excluded the expert’s opinion; allowed the expert to return 

the next day with a revised damages analysis; allowed the expert to testify to the new 

opinion; but then ruled after trial that the revised opinion was just another iteration 

of the excluded opinion and granted defendant’s motion for JMOL or, in the alternative, remittitur.

321. See ePlus, Inc. v. Lawson Software, Inc., 700 F.3d 509, 523 (Fed. Cir. 2012). 

In ePlus, the trial court excluded the damages expert testimony proffered by the patentee as “flawed and unreliable,” id. at 523, and then barred the patentee from presenting any damages evidence at trial under Federal Rule of Civil Procedure 37(c)(1) 

on the grounds that (1) the patentee had not previously disclosed any alternative 

royalty rate and thus “had not provided Lawson with adequate notice of its royalty 

rate theory in violation of Rule 26(f)” and (2) allowing the patentee “to supplement 

the record on the eve of trial would cause disruption in the proceedings and undue 

prejudice to Lawson.” Id. at 515. The Federal Circuit found no abuse of discretion in 

the trial court’s ruling, explaining:

Trial management is particularly subject to the wide latitude of the district court. Here the district court was reasonably concerned that any lastminute addition to the record would disrupt the proceedings and cause 

unacceptable delay. The district court was also concerned that by changing the damages calculation methodology on the eve of trial, ePlus would 
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court’s decision, including, for example, whether the other 

party would be prejudiced by having to respond to a new 

damages opinion;322 whether there is sufficient time before 

trial to reasonably accommodate a revised damages report, a 

revised rebuttal damages report, and a new round of expert 

depositions on the new reports323—or whether a revised expert report would disrupt the court’s trial schedule;324

whether the deficiencies in the report were the result of a recent change in the law;325 and whether the party can prove 

 

expose Lawson to an unjustified risk of prejudice. These concerns provided the district court with sufficient basis to preclude ePlus from presenting any evidence of damages at trial.

Id.

322. See id. at 515 (trial court did not abuse its discretion in concluding that 

allowing new damages methodology on the eve of trial would impose “unjustified 

risk of prejudice” to defendant); NetAirus Techs., LLC v. Apple Inc., No. 10-cv-3257, 

ECF No. 533, at 9 (C.D. Cal. Oct. 23, 2013) (allowing additional opportunity to revise 

excluded damages opinion “would cause undue prejudice on the eve of trial”); AVM 

Techs., LLC v. Intel Corp., 927 F. Supp. 2d 139, 146 (D. Del. 2013) (even if otherwise 

admissible, inventor’s proposed expert and hypothetical testimony regarding damages was disclosed “far too late, on the eve of trial”).

323. See Intellectual Ventures I LLC v. Xilinx, Inc., No. 10-cv-01065-LPS, Dkt. No. 

593, at 8 (C.D. Cal. Oct. 23, 2013) (striking expert damages report and allowing the 

parties two days to advise the court how they wished to proceed given the “imminence of trial” and lack of clarity as to whether the expert could even “perform a ‘doover’ damages analysis”).

324. See Network Protection Scis., LLC v. Fortinet, Inc., No. C 12-01106, ECF No. 

334, at 13–14 (N.D. Cal. Sept. 26, 2013) (The court denied excluded damages expert a 

“second bite at the apple,” noting “the trial date is only four days away and the parties and the Court have built their calendars around that date; to start over with a 

new royalty analysis would impose prejudice on the defense as well and disrupt the 

Court’s calendar, which is burdened with other trials set far into the future.”); ePlus, 

700 F.3d at 515 (trial court did not abuse its discretion in rejecting party’s proffered 

last-minute change in damages methodology; the court was “reasonably concerned” 

that such a change “would disrupt the proceedings and cause unacceptable delay”).

325. NetAirus, No. 10-cv-3257, ECF No. 533, at 9. In denying the patentee’s request 

for leave to submit a new damages report, the NetAirus court noted that the excluded 

report was itself a substitution for a previous damages expert’s report and explained:

Given the late substitution, and the benefit NetAirus has had of observing the developments in the damages jurisprudence prior to [the new expert’s] report, it was incumbent on NetAirus to ensure that [the new expert’s] damages theories were properly supported. Additionally, [the new 

expert] has had the benefit of having his opinions rejected in a number of 

published opinions at the trial and appellate level, including in a number 
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damages either under a new theory or without its expert, 

such as through a percipient witness or the other party’s expert, which depends on whether the proposed new theory of 

damages and the witnesses on whom it depends were previously disclosed in discovery or Rule 26 disclosures.326 The 

court also may consider whether the flaws in the expert’s testimony were the result of overreaching or other gamesmanship.327

Additional support for denying do-overs may be found in 

Federal Rule of Civil Procedure 37(c)(1), which provides: “If a 

party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use 

that information or witness to supply evidence on a motion, 

 

of leading cases concerning patent damages. Thus, the applicable framework was clear, and the Court breaks no new ground in the analysis of 

[the expert’s] opinions in this case.

Id. In light of the scope of the exclusions ordered, the court afforded the patentee an 

opportunity to submit an explanation of how the portions of the report not stricken 

constituted an affirmative damages theory. Id. at 9–10. The patentee did not do so. 

Id., ECF No. 615, at 4.

326. See infra notes 335–36; ePlus, 700 F.3d at 515 (trial court did not abuse its 

discretion by precluding trial testimony reflecting new damages theory, where the 

theory had not been disclosed pursuant to Rule 26(f)); AVM, 927 F. Supp. 2d at 146 

(inventor’s proposed damages testimony excluded on the grounds that it was improper expert opinion, improper speculation, and was not properly disclosed; “AVM 

never identified [the inventor] as having knowledge of damages” and “Intel would be 

prejudiced by AVM’s late disclosure of [the inventor’s] damages analysis”).

327. One court explained its reluctance to grant damages “do-overs” thus: “Over 

the course of many years and more than a dozen patent trials, the [court] has concluded that giving a second bite simply encourages overreaching on the first bite (by 

both sides). A second bite may be appropriate where the expert report can be salvaged with minimal disruption to an orderly trial, but where the report is not even 

close, there is a positive need to deny a second bite in order to encourage candor in 

the first place.” Network Protection, ECF No. 334, at 13–14. The court continued: “Possibly, plaintiff can cobble together a royalty case based on other disclosed witnesses 

and evidence. Possibly not. If not, it is a problem clearly of plaintiff’s own overreaching and it will not be allowed a second bite at the apple.” Id.

One judge’s standing patent rule, entitled “5.3 Hypothetically Negotiate with 

Care,” explains that a “legally and methodologically sound damages report is far 

more valuable to you than a more aggressive report that is subject to exclusion under Daubert. Requests for a second bite at the apple may be met with a citation to 

S.P.R. 5.3.” http://www.cacd.uscourts.gov/honorable-andrew-jguilford.
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at a hearing, or at a trial, unless the failure was substantially 

justified or is harmless . . . .”328 Courts have identified four factors that should be considered in determining whether to exclude testimony under Rule 37(c)(1):329

• the prejudice to or surprise of the party against whom 

the excluded witnesses would have testified;

• the ability of that party to cure the prejudice;

• the extent to which waiver of the rule against calling 

unlisted witnesses would disrupt the orderly and efficient trial of the case or other cases in the court; and

• bad faith or unwillingness in failing to comply with the 

court’s order.

Rule 37(c)(1) is intended to “provide a strong inducement 

for the disclosure of material,”330 and regardless of which 

party moves for relief under Rule 37(c)(1), the party facing 

the sanctions bears the burden of proof.331 Courts have upheld the use of Rule 37(c)(1) sanctions even when a litigant’s 

entire cause of action or defense has been precluded.332 Rule 

 

328. Rule 37(c)(1) also provides for alternate sanctions, including “order[ing] 

the payment of reasonable expenses, including attorney’s fees, caused by the failure,” “inform[ing] the jury of the party’s failure,” or “impos[ing] other appropriate 

sanctions.” 

329. In the Third Circuit, these factors are referred to as the Pennypack factors 

after Meyers v. Pennypack Woods Home Ownership Ass’n, 559 F.2d 894, 904–05 (3d Cir. 

1977). See AVM, 927 F. Supp. 2d at 146 (excluding damages testimony based on an 

application of the Pennypack factors). The Seventh Circuit adopted the Pennypack

factors in Spray-Rite Serv. Corp. v. Monsanto Co., 684 F.2d 1226, 1245 (7th Cir. 1982), 

and the Ninth Circuit in turn adopted “the Spray-Rite factors.” See Price v. Seydel, 961 

F.2d 1470, 1474 (9th Cir. 1992). See also Woodworker’s Supply, Inc. v. Principal Mut. 

Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999); Adalman v. Baker, Watts & Co., 807 

F.2d 359, 369 (4th Cir. 1986); United States v. Koziy, 728 F.2d 1314, 1320–21 (11th Cir.), 

cert. denied, 469 U.S. 835 (1984). 

330. See Fed. R. Civ. P. 37(c)(1) advisory committee notes.

331. See Yeti by Molly Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1107 (9th 

Cir. 2001) (“Implicit in rule 37(c)(1) is that the burden is on the party facing sanctions 

to prove harmlessness.”).

332. See id. at 1106 (Affirming trial court’s decision to exclude defendant’s expert testimony because “[p]laintiffs received [the expert’s] report one month before 

they were to litigate a complex case. To respond to it, plaintiffs would have had to 

depose [the expert] and prepare to question him at trial.”).
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91

37 sanctions are reviewed for abuse of discretion and decisions regarding trial management are “particularly subject to 

the wide latitude of the district court.”333

Where a court elects to permit a party to “redo” its expert’s damages analysis, the courts may consider requiring 

that party to pay for any additional costs the opposing party 

incurs as a result of the new damages report or theory—for 

example, the expert fees incurred to obtain a new rebuttal expert report, the costs associated with re-deposing the expert 

on the new damages analysis, and the cost of a second deposition of the rebuttal expert.

4. Effect of a Successful Rule 702 Challenge: Alternative Sources 

of Damages Evidence

Another question that can arise when expert damages testimony is excluded is whether the party whose expert testimony was excluded can rely on other witnesses to fill the 

void. This may depend, in part, on whether the “replacement” 

witnesses were properly disclosed in discovery or Rule 26(f) 

disclosures. For example, faced with the exclusion of its expert’s testimony, a patentee may seek to rely on testimony 

from the inventor to establish the factual predicates for a reasonable royalty. Care should be taken in evaluating proposed 

lay testimony on damages. An inventor may be able to testify 

to facts for which he or she is a percipient witness, such as 

the prior licenses he or she entered into; but the inventor 

should not be permitted to speculate concerning what type 

of license he or she might have granted in the hypothetical 

 

333. ePlus, 700 F.3d at 516, 523.
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negotiation, what royalty might have been expected in the negotiation, and the like.334 A lay witness generally may not offer 

an opinion on ultimate patent damages.335

A party whose expert testimony has been excluded also 

may seek to establish its damages by calling the other side’s 

damages expert in its case.336 The circumstances under which 

courts will allow a party to call the other side’s expert—as 

well as the standard used to make such a determination—is a 

question of regional circuit law that may vary.337

 

334. See NetAirus, ECF No. 615, at 5–10 (excluding inventor’s proffered testimony 

in part, noting that testimony concerning, e.g., the costs the defendant would have 

incurred to avoid infringement, the calculation of fees for use of the invention, and 

what would have happened—or what the inventor would have expected—in a hypothetical negotiation is inadmissible because it relates “to issues that are solely within 

the province [of] expert testimony”); AVM, 927 F. Supp. 2d at 146 (much of co-inventor’s proposed testimony relating to damages is improper expert opinion or improper speculative or hypothetical testimony about what “would have” occurred; lay 

witnesses, such as inventors, may not offer opinion on ultimate patent damages, including determining a reasonable royalty).

335. NetAirus, ECF No. 615, at 5–10; AVM, 927 F. Supp. 2d at 146. Cf. Bowling v. 

Hasbro, Inc., 582 F. Supp. 2d 192, 203 (D.R.I. 2008) (following exclusion of patentee’s 

damages expert’s testimony, patentee sufficiently established damages primarily 

through testimony of inventor and two of the accused infringer’s business executives, which together addressed most, if not all, Georgia-Pacific factors; inventor testified to what he would have charged to either license the patent or sell the patented 

product to the defendant).

336. See NetAirus, ECF No. 619, at 3 (“[C]ourts have repeatedly observed that 

once a party has given testimony through deposition or expert reports, those opinions do not ‘belong’ to one party or another, but rather are available for all parties 

to use at trial.” (citation omitted)).

337. Compare, e.g., Peterson v. Willie, 81 F.3d 1033, 1037–38 (11th Cir. 1996) 

(“Once a witness has been designated as expected to testify at trial, there may be 

situations when the witness should be permitted to testify for the opposing party . . . 

[and] [t]his decision is committed to the sound discretion of the court.”); De Lage 

Operational Servs., LLC v. Third Pillar Sys., Inc., 851 F. Supp. 2d 850, 853 (E.D. Pa. 

2012) (“The weight of authority favors allowing [the plaintiff] to introduce the opinion testimony of [the defendant]’s expert . . . [and] in these circumstances, there is 

no reason not to allow a party to call the opposing party’s expert witness to testify 

at trial.”); Doe v. Eli Lilly & Co., Inc., 99 F.R.D. 126, 128 (D.D.C. 1983) (“[N]o party to 

litigation has anything resembling a proprietary right to any witness’s evidence . . . 

[and] [a]bsent privilege, no party is entitled to restrict an opponent’s access to a 

witness . . . [e]ven an expert whose knowledge has been purchased.”) with Durflinger 

v. Artiles, 727 F.2d 888, 891 (10th Cir. 1984) (“exceptional circumstances” standard 

applies to requests to use the testimony of an opposing party’s expert, when that 
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C. Court-Appointed Damages Experts

In almost all patent cases, the litigants present damages evidence principally through expert testimony. Patent damages 

analyses can be complex, however, and the parties’ experts 

can differ widely on the proper damages amount. It may be 

difficult for a jury to evaluate the credibility of wildly divergent expert analyses and, in particularly complex cases, the 

court may encounter difficulty in evaluating whether the experts’ opinions pass muster under Daubert. In such instances, 

a court may consider whether to appoint a neutral damages 

expert under Federal Rule of Evidence 706.

Court-appointed damages experts are distinct from courtappointed special masters. Special masters in patent cases 

generally are appointed to assist the court with discovery issues and claim construction, not damages.338 Moreover, unlike special masters, court-appointed damages experts are expected to give testimony.

Although the rule does not restrict the circumstances in 

which a court can appoint an expert, it is rarely invoked. In 

fact, “[c]ourts and commentators alike have remarked that 

Rule 706 should be invoked only in rare and compelling circumstances.”339

Rule 706 gives the trial court broad discretion to appoint 

an expert witness at the request of a party or on its own motion.340 A court may order the parties to show cause why it 

should not appoint an expert, and it may ask the parties to 

nominate experts.341 It may appoint any expert on which the 

 

party no longer intends to call the expert as a witness); Lehan v. Ambassador Programs, Inc., 190 F.R.D. 670, 672 (E.D. Wash. 2000) (“[T]he court has the discretion to 

permit one party to call as a witness at trial the opposing party’s expert witness when 

there has been a showing of ‘exceptional circumstances.’”).

338. See Jay P. Kesan & Gwendolyn G. Ball, A Study of the Role and Impact of 

Special Masters in Patent Cases 7 (Federal Judicial Center 2009).

339. Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., 558 F.3d 1341, 1348 (Fed. 

Cir. 2009) (citations omitted).

340. Fed. R. Evid. 706.

341. Id. 706(a).
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parties agree or one of its own choosing.342 In any event, the 

expert must agree to act,343 and of course the expert must be 

neutral.

A court considering whether to exercise its discretion under Rule 706 should carefully evaluate a number of factors. 

The primary consideration should be whether appointment 

of a neutral expert “will help secure . . . the ascertainment of 

truth and the just determination of proceedings.”344 In most 

instances, the normal operation of the adversarial system will 

suffice to promote accurate damages fact-finding, and no 

court-appointed expert will be necessary.345 It is possible, 

however, that the specific facts and posture of the case—including the complexity of the issues and the disparity in the 

parties’ views on damages—may be such that a neutral expert 

could be useful.346 The court should consider whether the addition of a neutral expert will unduly or unfairly delay the progress or resolution of the case or impose an undue financial 

burden on the parties. An appointed expert’s fees and expenses are paid by the parties,347 and the court should consider the impact of that added expense in deciding whether 

to appoint a neutral expert and how narrowly or broadly to 

 

342. Id.

343. Id.

344. Gen. Electric Co. v. Joiner, 522 U.S. 136, 150 (1997).

345. See In re Joint E. & S. Dists. Asbetos Litig., 830 F. Supp. 686, 693 (E.D.N.Y. 

1993) (“[U]se of Rule 706 should be reserved for exceptional cases in which the ordinary adversary process does not suffice.”).

346. See, e.g., Monolithic Power, 558 F.3d at 1347–48 (court did not abuse its discretion by appointing a neutral technical expert in conformance with the standards 

of Rule 706; the case was “unusually complex” and the court was confronted with 

“starkly conflicting expert testimony”); Walker v. Am. Home Shield Long Term Disability Plan, 180 F.3d 1065, 1070–71 (9th Cir. 1999) (no abuse of discretion in Rule 706 

appointment where scientific evidence was “confusing and conflicting” and appointment aided court in “evaluating contradictory evidence about an elusive disease of 

unknown cause”); Oracle Am., Inc. v. Google Inc., No. C 10-03561 WHA, 2011 U.S. Dist. 

LEXIS 129766, at *8 (N.D. Cal. Nov. 9, 2011) (finding that “an independent economic 

expert was needed to aid the jury” in light of “the parties’ extremely divergent views 

on damages and the unusual complexity of the damages aspect” of the case).

347. Fed. R. Evid. 706(c)(2) (compensation of court-appointed experts in civil

cases is paid “by the parties in the proportion and at the time that the court directs”). 

Typically, such expert fees are shared evenly by the parties.
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95

define the expert’s responsibilities. If an expert is appointed, 

the court should actively supervise the expert’s bills and billing practices.

A court has broad discretion to fashion the selection process. For example, the court may ask each party to nominate 

a specific number of candidates and then select an expert 

from among them (particularly if the same expert appears on 

both lists). Alternatively, it may direct the parties to agree on 

an expert, order the parties’ experts to jointly propose several experts from which the court will make a selection, or 

identify an expert on its own. Both the method and timing of 

the appointment are within the court’s discretion. The court 

should consider whether it would be more effective to appoint an expert earlier or later in the case, a decision that may 

be affected by the expert’s intended role.

Where the court elects to appoint a damages expert, it 

must clearly delineate the expert’s responsibilities and deadlines348—preferably in a written order, to avoid uncertainty or 

misunderstanding. The court should identify whether the 

neutral expert is retained only to assist the court in evaluating 

Daubert challenges to the parties’ experts or to prepare an independent damages analysis. If the latter, the neutral expert 

should be required to submit a written report.349 The expert 

may be deposed by any party350 and also should be permitted 

to attend the depositions of the parties’ experts. Some courts 

appoint pro bono independent counsel to represent the neutral expert.351 The parties have the right to cross-examine at 

 

348. Id. (“The court must inform the expert of the expert’s duties. The court may 

do so in writing and have a copy filed with the clerk or may do so orally at a conference in which the parties have an opportunity to participate.”).

349. Rule 706 requires the expert to advise the parties of any findings it makes 

but does not specifically require a written report. Fed. R. Evid. 706(b)(1).

350. Fed. R. Evid. 706(b)(2).

351. Oracle, ECF No. 374 at 1 (appointing pro bono counsel for court-appointed 

damages expert); id., ECF No. 272 (court-appointed expert’s counsel “will assist with 

formulating an appropriate description of the witness’s assignment and with coordinating the mechanics of access to evidentiary materials and the procedures for payment by the two litigants”).
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trial as if the expert were an adverse expert witness and to 

respond to the expert’s critiques of the parties’ own expert 

analyses.352 All such details should be set forth in a written 

order.353

The court has discretion to authorize disclosure to the

jury of the fact that the court appointed the expert witness.354

Where the court chooses to do so, one of the primary concerns with court-appointed testifying damages experts is the 

potential for the jury to give the expert’s testimony undue 

weight simply because the expert was appointed by the 

court.355 Although the Federal Circuit has recognized that 

Congress rejected this concern when it decided to authorize 

adoption of Rule 706,356 courts should remain sensitive to this 

concern and, if they choose to disclose the expert’s court-appointed status, should carefully instruct the jury about the 

expert’s role, and caution the jury not to give the appointed 

expert’s testimony any greater weight than it would give to 

that of any other witness.357 Of course, the appointment of an 

 

352. Fed. R. Evid. 706(b)(3), (4) (expert may be called to testify by the court or 

by any party and may be cross-examined by any party, including the party that called 

the expert).

353. See Oracle, ECF No. 413, at 1–3 (authorizing court-appointed expert to “review any and all materials necessary for him to be personally and thoroughly informed as to all aspects of the damages claims and analyses of the parties”; ordering 

him to prepare an expert report both critiquing each parties’ damages report and 

setting forth his own damages assessment; giving parties the right to conduct discovery from the expert; ordering the court expert to testify at trial; allowing the expert to attend depositions of the parties’ experts and have his counsel question 

them; and authorizing expert to communicate with parties’ experts “in an informal 

off-the-record manner to address any ambiguities he may wish to have clarified”).

354. Fed. R. Evid. 706(d).

355. See Fed. R. Evid. 706, advisory committee’s notes (1972) (“[T]he contention 

is made that court appointed experts acquire an aura of infallibility to which they are 

not entitled.”).

356. See Monolithic Power, 558 F.3d at 1348.

357. The Federal Circuit noted with approval that the trial court in Monolithic 

Power had instructed the jury: “You should not give any greater weight to [the appointed expert’s] opinion testimony than to the testimony of any other witness 

simply because the court ordered the parties to retain an independent witness. In 

evaluating his opinion, you should carefully assess the nature of and basis for [the 

expert’s] opinion just as you would do with any other witness’ opinion.” 558 F.3d at 
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independent expert does not limit the parties’ ability to call 

their own experts, who may attack, support, or supplement 

the testimony of the court-appointed expert.358

D. In Limine Motions

In limine motions can be an important tool in effective trial 

management, providing the court “an opportunity to establish procedures and substantive limitations that will streamline the evidence, shorten the trial, and reduce jury confusion.”359 The key to effective use of in limine rulings is to issue 

them early, ideally not later than the final pretrial conference. 

Early determination of these motions gives the parties time to 

adjust their trial presentations to reflect the court’s rulings 

and, depending on the importance of the testimony, may provide further impetus toward settlement. Some in limine motions need more context and information to permit a reasoned determination, and where that is the case, the court 

should not hesitate to conditionally grant them—or hold 

them in abeyance—until the necessary context can be developed at trial. Of course, rulings on in limine motions are not 

binding on the court; the court may revisit and revise its prior 

rulings as the case progresses, where it is appropriate or necessary to do so.360

Some of the most common in limine motions related to 

patent damages are directed to testimony and argument concerning the accused infringer’s net worth, total revenue, or 

revenues from the sales of anything but the actual royalty 

base. Such information normally is inadmissible as unfairly 

prejudicial and should not be presented to the jury, whether 

in voir dire, opening statement, witness testimony, or closing 

 

1348. The court also observed that, in fact, the jury’s verdict did not entirely track 

the neutral expert’s opinions. Id.

358. Fed. R. Evid. 706(e); Monolithic Power, 558 F.3d at 1347.

359. Patent Management Guide, supra note 2, at 7-39. See also Mixed Chicks LLC 

v. Sally Beauty Supply LLC, 879 F. Supp. 2d 1093, 1094–95 (C.D. Cal. 2012) (identifying 

“proper” and “improper” reasons for in limine motions). 

360. Ohler v. United States, 529 U.S. 753, 758 n.3 (2000).
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argument.361 Of course, in limine motions may present other 

issues that commonly arise in the patent damages context, 

such as untimely disclosures, untimely expert opinions, opinions not disclosed in reports, affirmative opinions disclosed 

in rebuttal reports, certain settlement agreements offered as 

evidence of comparable licenses, and other information that 

is more prejudicial than probative.

362

The court should make clear well in advance of the filing 

deadline for in limine motions—ideally, in a written order—

that the parties should not bring in limine motions that are, 

in effect, disguised motions for summary judgment. In limine 

motions are a vehicle to make important evidentiary rulings 

prior to trial, not to achieve summary disposition.

 

361. See Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1320–21 (Fed. Cir. 

2011).

362. Patent Management Guide, supra note 2, at 7-39 to 7-57.
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VII. Trial

A. Separate Trials

A case-management technique used frequently outside the 

patent context is separate trials of liability and damages, 

sometimes with a stay of damages discovery until liability issues are resolved. Rule 42 gives courts wide discretion to separate issues or claims at trial “[f]or convenience, to avoid 

prejudice, or to expedite and economize.”363 In appropriate 

cases, courts should consider whether to exercise their discretion under Rule 42 to conduct separate trials.

In deciding whether one trial or separate trials will best 

serve the convenience of the parties and the court, avoid prejudice, and minimize expense and delay, the primary consideration is what approach will result in a just, speedy, and inexpensive disposition of the litigation. In many instances, the 

conventional approach of allowing discovery on liability and 

damages to proceed concurrently—followed by a single trial 

addressing all merits issues—will be most efficient and expeditious. In others, a phased or bifurcated approach to discovery and trial may be preferable. The determination is necessarily highly fact-driven and is committed to the court’s 

sound discretion.

Relevant considerations include the prospect of avoiding 

the burden and expense of full damages discovery (and, perhaps, avoiding the need to try damages at all), the extent to 

 

363. Fed. R. Civ. P. 42(b). See Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 

1209, 1212 (Fed. Cir. 1987) (“Under Rule 42(b), a district court has broad discretion 

in separating issues and claims for trial as part of its wide discretion in trial management.”). As the Federal Circuit explained in Robert Bosch, LLC v. Pylon Mfg. Corp., 719 

F.3d 1305, 1319–20 (Fed. Cir. 2013):

District courts have the authority to try [damages and willfulness] issues 

together or separately just as they have the authority to try all issues together at the liability stage. They may decide, for example, for reasons of 

efficiency due to the commonality of witnesses or issues in any particular 

case, that bifurcation is not warranted. District court judges, of course, are 

best positioned to make that determination on a case-by-case basis.
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which damages issues differ from or are intertwined with the 

primary liability issues, and whether a single trial would create the potential for jury bias or other prejudice.364 The court 

also should evaluate the potential for jury confusion. Some of 

these factors will loom larger in complex cases involving multiple patents and many accused products.365

In jury trials, there are three general approaches to handling patent damages issues:

Unitary trial: Damages issues are tried together with liability, so that the jury decides both liability and damages at 

the same time, and damages and liability discovery typically are conducted simultaneously.

Phased trial: Liability issues are tried to verdict and then, 

if liability is found, the same jury hears evidence on, and 

determines the amount of, damages to be awarded. Again, 

damages and liability discovery typically proceed at the 

same time.

Bifurcated trial: All issues except damages are tried to verdict first, leading to the entry of a final judgment that may 

be appealed as a matter of right. Damages are then tried 

only if needed, after appeal, to a different jury on remand. 

 

364. For example, in A.L. Hansen Mfg. Co. v. Bauer Prods., Inc., No. 03C3642, 2004 

U.S. Dist. LEXIS 8935 (N.D. Ill. May 17, 2004), the court explained the Rule 42(b) inquiry under Seventh Circuit law:

First, the trial court must determine whether bifurcation would either promote judicial economy or avoid prejudice to the parties. Next, if one or 

both of these interests are implicated, the trial court must balance these 

interests against any countervailing prejudice to the non-moving party. 

Third, when the trial court is satisfied that this balance favors bifurcation, 

the court may order separate proceedings, but only if doing so would not 

violate the Seventh Amendment.

Id. at **4–5 (citations omitted).

365. In a case involving five asserted patents and, apparently, multiple accused 

products, the court in part explained its decision to grant separate liability and damages phases by noting that “[r]ather than having to present all the evidence concerning plaintiff’s alleged damages at once, the parties can wait to see precisely which 

inventions and [accused products] are involved, and limit their damages proof to 

them.” Laitram Corp. v. Hewlett-Packard Co., 791 F. Supp. 113, 116 (E.D. La. 1992).
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Damages discovery typically is stayed until after the liability issues are finally determined.

Each of these three approaches has its advocates and, based 

on the facts of the case and the nature of the issues to be 

tried, certain advantages and disadvantages.

Unitary trials may be expeditious, but they require counsel to make strategic decisions about the amount of trial time 

to allocate to damages, especially when liability is strongly 

contested. And if the jury concludes there is no liability, the 

time and effort devoted to the damages presentation (and 

damages discovery) will have been unnecessary. Moreover, a 

single, unphased trial of all issues may pose “the danger (especially perilous in complicated trials with many separate 

and distinct issues) that the jury will consider evidence that 

may be admissible on only one issue to the moving party’s 

prejudice on other issues.”366 Some counsel favor unitary trials on the basis that a jury that has doubt about, but nonetheless finds, liability may be more restrained in the amount of 

damages it ultimately awards. Moreover, at the discretion of 

the court, the jury in a unitary trial may be asked to render a 

damages verdict regardless of its decision on liability, 

thereby providing a dollar figure that may be reinstated in the 

event of a successful JMOL on liability or a reversal on appeal 

or may be referenced by the parties in subsequent settlement 

negotiations.

Proponents of phased trials cite efficiency, as a trial addressing only liability is likely to be simpler and shorter, and 

the damages phase of trial may prove unnecessary if liability 

is not found. Because the jury is not usually told at the outset 

that it will need to sit for a second phase of the trial only if it 

finds liability (for fear that it will skew the liability result), 

some counsel are concerned that a phased trial may not place 

the jury in a good frame of mind when it learns that it must 

hear more evidence and render a second verdict.

 

366. Id.
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Proponents of bifurcated trials also cite efficiency, while 

touting the ability to take an interim appeal of the liability determination to the Federal Circuit. Section 1292(c)(2), which 

governs interlocutory appeals in patent cases, confers jurisdiction on the Federal Circuit “over appeals where the district 

court has exercised its discretion to bifurcate the issues of 

damages and willfulness from those of liability.”367 If such an 

interim appeal results in a conclusion of no liability—or if the 

case is settled pending (or as a result of) the appeal—damages discovery will be avoided and damages will never need 

to be tried, resulting in substantial time and cost savings. As 

one court explained:

In the normal case separate trials of issues is seldom required, but in a patent infringement suit considerations exist which suggest that efficient judicial administration 

would be served by separate trials on the issues of liability 

and damages. The trial of the damages question in such a 

suit is often difficult and expensive, while being easily severed from the trial of the questions of validity and infringement of the patent. A preliminary finding on the question of 

liability may well make unnecessary the damages inquiry, 

and thus result in substantial saving of time of the Court and 

counsel and reduction of expenses to the parties. Moreover, 

separate trial of the issue of liability may present counsel 

the opportunity to obtain final settlement of that issue or 

appeal without having reached the often time-consuming 

and difficult damages question.368

 

367. Robert Bosch, 719 F.3d at 1320; 28 U.S.C. § 1292(c)(2) (an appeal may be 

taken “from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and 

is final except for an accounting”).

368. Swofford v. B&W, Inc., 34 F.R.D. 15, 19–20 (S.D. Tex. 1963). On appeal, the 

Fifth Circuit noted that “[t]he state of the record on this interlocutory appeal makes 

a decision on separability take on facets of a decision based on hypothetical facts; 

we cannot tell from the record whether the action pending below involves issues of 

fact common to liability and damages so as to preclude a separate trial.” Swofford v. 

B&W, Inc., 336 F.2d 406, 415 (5th Cir. 1964). The court nevertheless affirmed, noting,

“[W]e approve of the district judge’s order on the basis that we cannot think of an 

instance in a patent action where the damage issue is so interwoven with the other 
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Particularly in complex cases, some courts favor bifurcation, reasoning that “[i]t will be difficult enough to educate 

the jury about the various concepts comprising the validity, 

enforceability and infringement issues that influence liability . . . . To include at the same time proof of the damages 

issues could risk needless juror confusion.”369 Some courts 

strongly favor bifurcation in patent cases; indeed, one court 

has asserted that “bifurcation is appropriate, if not necessary, 

in all but exceptional patent cases.”370 Even courts that do not 

embrace that view can properly consider whether, in light of 

the facts of each particular case, separate trials and/or discovery would best serve the interests of justice. Of course, 

the court must ensure that any order bifurcating trial preserves all federal rights to jury trial.371

Critics of bifurcated trials contend that such trials lead to 

years of additional litigation and appeals, to the detriment of 

patentees with meritorious claims. Accused infringers may 

 

issues that it cannot be submitted to the jury independently of the others without 

confusion and uncertainty.” Id.

369. Laitram Corp., 791 F. Supp. at 116 (citations and footnote omitted).

370. See, e.g., Robert Bosch L.L.C. v. Pylon Mfg. Corp., No. 1:08-00542, ECF No. 

123 at 1 (D. Del. Aug. 26, 2009) (granting motion to bifurcate willfulness and damages 

for both discovery and trial, but acknowledging that “limited damages discovery may 

be relevant for purposes of exploring settlement and the issue of commercial success”). On appeal in that action, the Federal Circuit affirmed its jurisdiction, under 

28 U.S.C. § 1292(c)(2), to entertain an appeal of a liability determination where issues 

of damages and willfulness have yet to be tried. Robert Bosch, LLC v. Pylon Mfg. 

Corp., 719 F.3d 1305, 1320 (Fed. Cir. 2013).

371. See Fed. R. Civ. P. 42(b). The Seventh Amendment may be implicated where 

liability and damages are to be tried by different juries, as the Constitution requires 

that “a given issue may not be tried by different successive juries.” Blyden v. Mancusi, 186 F.3d 252, 268 (2d Cir. 1999); see also United Air Lines, Inc. v. Wiener, 286 

F.2d 302, 306 (9th Cir. 1961) (on facts presented, “the issues of liability and damages, 

exemplary or normal, are not so distinct and separable that a separate trial of the 

damage issues may be had without injustice”). In In re Innotron, 800 F.2d at 1084, the 

Federal Circuit denied a petition for writ of mandamus challenging, on Seventh 

Amendment grounds, the trial court’s order directing separate trials of the plaintiff’s 

patent infringement action and defendant’s antitrust counterclaims. It explained: 

“‘the prohibition is not against having two juries review the same evidence, but rather against having two juries decide the same essential issues.’” In re Innotron Diagnostics, 800 F.2d 1077, 1086 (Fed. Cir. 1986) (quotation and citation omitted) (emphasis in original).
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disfavor a bifurcated damages trial for fear that jurors addressing only damages may take a less moderate approach to 

the damages determination, since they undertake their damages deliberations knowing the defendant to be an infringer 

and without the benefit of any mitigating evidence that may 

have been presented during the liability trial. Moreover, 

where liability is found, bifurcation inevitably results in some 

duplication, as a second jury must be educated about the basics of the technology and market, at least to the point where 

it can understand such issues as, for example, the nature and 

impact of any noninfringing substitutes.

A court that is inclined to phase or bifurcate a patent trial 

will need to determine whether to treat willfulness as part of 

the liability or damages portion of trial. Courts differ in how 

they address this question. Some of the evidence relating to 

willfulness, such as that relating to the development of the 

infringing product, normally will be presented during the liability trial for other purposes. Such evidence need not be presented in the damages/willfulness segment of a phased trial, 

but would have to be presented again if willfulness is tried to 

a second jury. Other willfulness evidence, such as the existence of or reliance on the opinions of counsel, is normally relevant only to the willfulness issue. Ultimately, whether it is 

most efficient and fair to address willfulness at the same time 

as the liability or the damages issues is a question left to the 

court’s discretion, based on the facts of the specific case and 

the nature of the evidence that will be presented on the point.

Although most cases go to the Federal Circuit with both 

liability and damages determined, as noted above, the court 

has authority to hear appeals where willfulness and damages 

remain to be determined.372 However, the Federal Circuit has 

declined to hear an appeal where injunction issues remain 

outstanding.373

 

372. Robert Bosch, 719 F.3d at 1320.

373. See Advanced Cardiovascular Sys. Inc. v. Medtronic Vascular, Inc., 231 F. 

App’x 962, 963 (Fed. Cir. 2007) (nonprecedential) (dismissing appeal as premature 

where request for permanent injunction remained pending before the district court); 
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105

Multidefendant cases can present particular trial challenges for resolving damages issues in a way that is fair to all 

parties. Even if certain liability-related issues are common to 

all the defendants, damages or related issues like willfulness 

may not be. For example, a different hypothetical negotiation 

date may apply to each defendant. The defendants may have 

different design alternatives available to them, or they may

use the patented invention in different ways. Accordingly, 

each defendant may have good justification for wishing to 

present its own damages case, rather than joining in a single 

damages presentation. In such circumstances, the court 

should consider severing defendants for purposes of trial, 

both as a matter of efficiency and to avoid the possibility of 

unfair prejudice. Even where the court concludes that severance is not necessary or appropriate, the amount of time allocated for trial (including the time allocated to each side’s or 

party’s trial presentation) should reflect the need for separate damages presentations by the defendants and ensure 

that each party has a fair opportunity to present its case.

Courts also should be aware of a procedure known as “reverse bifurcation,” which inverts traditional “liability-beforedamages” bifurcation by trying damages issues separately before liability issues.374 The goal is to definitively inform the 

parties of the stakes in the case, thereby enhancing the possibility of early settlement and potentially achieving significant time and cost savings for both the court and the parties.375

 

see also Schwarz Pharma, Inc. v. Teva Pharms. USA, Inc., 132 F. App’x 369, 370 (Fed. 

Cir. 2005) (nonprecedential) (same).

374. See STC.UNM v. Intel Corp., No. 1:10-cv-01077, ECF No. 168 (D.N.M. Dec. 22, 

2011).

375. See In re Innovatio IP Ventures, LLC Patent Litigation, No. 11-cv-9308, ECF No. 

975, at *1 (N.D. Ill. Oct. 3, 2013), in which the defendants contended that the patent 

holder’s patents were standard-essential and therefore subject to an obligation by 

the patent holder to license them on reasonable and nondiscriminatory terms. In 

ordering the damages determination to proceed first, the court explained that addressing damages first may aid settlement.
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106

Although not the norm in patent litigation,376 the reverse 

bifurcation procedure has been used by several courts in patent actions,377 and the procedure has been requested and 

considered in others.378 In appropriate circumstances and 

cases, courts should consider whether such an approach 

would be useful.

B. Voir Dire

No special procedures normally are required for voir dire in 

patent cases. Courts should ensure, however, that voir dire is 

not used as a vehicle to put improper or unduly prejudicial 

information before the potential jurors.379 For example, counsel sometimes seek to include voir dire questions that reveal 

or relate to the size of the accused infringer, its revenues, 

profits, or market capitalization, or revenues on the accused 

 

376. To date, reverse bifurcation has been most often used in large, complex 

product-liability cases, such as asbestos litigation.

377. See In re Innovatio, ECF No. 975, at *1; Microsoft Corp. v. Motorola, Inc., No. 

C10-1823, 2013 U.S. Dist. LEXIS 60233, at *15–16 (D. Wash. Apr. 25, 2013) (in action 

alleging patentee’s failure to grant a license to standard-essential patents at a reasonable and nondiscriminatory rate, court held initial bench trial to determine royalty range for patents at issue, “to enable a fact-finder in a later trial to determine 

whether Motorola’s offer letters breached Motorola’s RAND obligation to offer a license for its patents in good faith”)

378. See Gellyfish Tech. of Tex. L.L.C. v. Alltel Corp., No. 2:11-cv-00216, ECF No. 

133, at 2–3 (E.D. Tex. July 22, 2011), in which the accused infringer asserted that the 

cost of litigating the action would exceed by a thousand times the maximum damages 

of $2,250 and therefore sought to sever its case from the other defendants, reverse 

bifurcate the case against it so that damages discovery and trial would precede liability discovery and trial, and then conduct a mandatory mediation following the 

damages trial. The parties resolved the motion prior to a court ruling. See also 

STC.UNM, ECF No. 168, at 3 (finding that facts of case did not justify “reversing the 

ordinary progression of trial” and suggesting that reverse bifurcation “is most useful 

where the parties ‘have excellent information about the likelihood of success on the 

issue of liability and the real sticking points are the individual issues of causation 

and damages’” or “where the costs to the parties of litigating a case significantly outweigh the case’s overall value” and “an early damages determination may force all 

parties to re-evaluate whether a case is truly worth litigating” (citation omitted)).

379. Mixed Chicks LLC v. Sally Beauty Supply LLC, 879 F. Supp. 2d 1093, 1094

(C.D. Cal. 2012) (voir dire “is not to indoctrinate, inculcate, influence, insinuate, inform, or ingratiate”).
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107

products as a way of influencing the jury’s thinking on damages. Much of this type of information is properly the subject 

of in limine motions and is inadmissible in evidence, much 

less permissible in voir dire. Attempts to put such information before a jury panel through “hypothetical questions” 

are just as prejudicial as introducing it into evidence and 

should not be permitted.

C. Procedures to Aid the Jury’s Understanding

In jury trials, providing preliminary substantive instructions 

on the applicable law before opening statements by counsel, 

allowing counsel to make interim statements during the evidentiary phase of lengthy trials, and allowing jurors to submit 

written questions for witnesses to answer are all procedures 

that have been used to aid the jury in understanding the 

case.380 Reasonable royalty damages present particularly 

complex issues that may warrant application of some or all of 

these techniques. After evaluating the complexity and length 

of any given trial, courts should consider whether such procedures would be helpful to the jury.

D. Objections

As with all cases tried to a jury, there is a danger in patent 

jury trials that “speaking objections,” the presentation of prejudicial evidence, or the inappropriate arguments of counsel 

may be highly prejudicial to the outcome of the case. Judges 

should be mindful of this risk and should entertain pretrial 

motions and establish procedures that will prevent the jury 

from hearing information that may be more prejudicial than 

probative on the issue of patent damages. Special care should 

be taken to address how prior rulings, including the court’s 

prior Markman rulings, are to be addressed with the jury, as 

well as any other issues that might interfere with the determi-

 

380. See, e.g., Seventh Circuit American Jury Project Final Report (Sept. 2008), 

http://www.chicagoiplitigation.com/uploads/file/American%20Jury%20Project.pdf.
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nation of the patent damages on properly introduced evidence. Examples of evidence that should be excluded include 

references to general industry royalty rates or to amounts 

paid by third parties on account of patents not in suit, unless 

a suitable foundation is laid establishing the applicability and 

comparability of those rates or payments to the patents or 

products at issue.

E. JMOL at the Close of Evidence

Pursuant to Rule 50, once a party has been fully heard on a 

damages issue during a jury trial, the court may grant a motion to resolve the issue against that party if a reasonable jury 

would not have a legally sufficient evidentiary basis to find for 

the party on that issue. Such a motion may be made at any 

time before the case is submitted to the jury. Such motions 

often are addressed to damages issues, including, e.g., issues 

related to apportionment or the entire market value rule, or 

to the availability of a particular category of damages. Where 

a party elects not to file a pre-verdict JMOL motion on damages, it thereafter may not challenge the sufficiency of the evidence to support the jury’s damages award.381

F. Verdict Forms

The court should require the parties to submit a proposed 

verdict form, ideally one on which they agree. Absent agreement, each side should submit its proposed form to the court, 

with a short explanation of the perceived benefits of its proposal.

Although the law does not require a trial court to use a 

special verdict in patent cases,382 it is advisable for the court 

to do so.383 The Supreme Court has noted, “in cases that reach 

the jury, a special verdict and/or interrogatories on each 

 

381. i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 856–57 (Fed. Cir. 2010).

382. McGinley v. Franklin Sports, Inc., 262 F.3d 1339, 1356 (Fed. Cir. 2001).

383. See Fed. R. Civ. P. 49. The Model Patent Instructions contain model verdict 

forms that can be useful starting points.
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109

claim element could be very useful in facilitating review, uniformity, and possibly postverdict judgments as a matter of 

law.”384 The Federal Circuit also has encouraged special verdicts, particularly in complex cases.385

Special verdicts serve important purposes, both at trial 

and on appeal. Special verdicts focus the jurors’ attention on 

each of the multiple issues they are asked to determine and 

give the jury an orderly way to approach their deliberations 

and verdict. They also facilitate appellate review and may 

help avoid remand and retrial, or at least narrow the scope of 

any post-appeal proceedings. As one court explained:

The special verdict compels detailed consideration. But 

above all it enables the public, the parties and the court to 

see what the jury really has done. The general verdict is either all wrong or all right, because it is inseparable and inscrutable. A single error completely destroys it. But the special verdict enables errors to be localized so that the sound 

portions of the verdict may be saved and only the unsound 

portions are subject to redeterminations through a new 

trial.386

This latter benefit, avoiding remand for retrial, is the special 

verdict’s chief benefit to the trial court. That benefit must be 

 

384. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 39 (1997). “The 

theoretical distinction between general and special verdicts is that general verdicts 

require the jury to apply the law to facts, and therefore require legal instruction, 

whereas special verdicts compel the jury to focus exclusively on its fact finding role.” 

Function Media, LLC v. Google, Inc., 708 F.3d 1310, 1328–29 (Fed. Cir. 2013).

385. Union Oil Co. v. Atlantic Richfield Co., 208 F.3d 989, 997 (Fed. Cir. 2000) (“In 

the course of the lengthy jury trial the district court heeded this court’s counsel to 

use special verdicts in complex cases.”); Comark Commc’ns, Inc. v. Harris Corp., 156 

F.3d 1182, 1189 (Fed. Cir. 1998) (“We note that the use of special verdict interrogatories drawn to each claim element has been endorsed and indeed encouraged by the 

Supreme Court.”).

386. Richardson-Vicks, Inc. v. Upjohn Co., 122 F.3d 1476, 1484–85 (Fed. Cir. 

1997). The court affirmed the trial court’s order overturning the jury verdict and 

granting JMOL of invalidity, noting that “[s]orting through the record in a case such 

as this when the issue is the correctness of a jury verdict is made considerably more 

difficult by the absence of specific findings by the jury. The effort by the successful 

plaintiff to support the jury verdict in its favor is also made more difficult. The preferred route would have been to submit the underlying factual issues to the jury in 

the form of a special verdict under rule 49(a).” Id.
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weighed, however, against the possibility that the special verdict form itself will create juror confusion. Ideally, the verdict 

form will provide enough information to avoid the need for 

remand for retrial, but will not require so much juror input as 

to cause confusion.

Damages, of course, are an important part of the special 

verdict form. At the very least, the verdict form should ask 

the jury to enter separate amounts for each category of damages sought (e.g., lost profits, reasonable royalty, price erosion damages). It also may be advisable to separately enter 

damages amounts for direct and indirect infringement, or at 

least ask the jury to indicate if the amounts are different.

Where reasonable royalties are sought, it may be advisable for the special verdict form to require the jury to state the 

royalty rate, the royalty base, and the amount of reasonable 

royalties awarded. In cases where infringement is proven and 

will potentially continue postverdict, it is helpful for the verdict form to reflect whether the royalty damages awarded by 

the jury were based on a running royalty or a paid-up lumpsum royalty, as this would affect any claim for an award of 

ongoing royalties. See section VIII.B below.

In multiple patent cases, the court may consider asking 

the jury to state whether (and if so, how) the royalty rate and 

base, or the lump-sum royalty, would change if not all of the 

patents in suit are valid and infringed. Where damages are 

sought under the entire market value rule, the court should 

consider a verdict form that asks the jury whether the accused feature is the basis for customer demand. Requiring the 

jury to provide separate answers to these questions will increase the likelihood that, even if the entire verdict is not upheld on appeal (e.g., if one or more of the asserted patents 

ultimately is found invalid or unenforceable), the Federal Circuit will be able to resolve the case without having to remand 

it to the district court for further proceedings.

Special verdict forms for damages can be particularly useful when more than one patent is at issue. Depending on the 

circumstances, including whether the patents are related and 
VII. Trial

111

whether the same products are accused of infringing each of 

the patents, it may be appropriate to use a verdict form that 

seeks separate damages for each patent. If more than a single 

damages amount is to be entered, however, care should be 

taken to ensure the jury understands which of the amounts 

needs to be entered depending upon their conclusions on the 

issues. For example, if separate questions are presented relating to the amounts of reasonable royalties and lost profits, 

the form of verdict should make clear that answers to both 

questions are required. Similarly, if amounts of damages are 

to be entered even if a negative verdict is returned on the issue of liability, the form of verdict should so clearly state.

Often there is a gap of time between when damages evidence has been produced and the date of trial. In this circumstance, “the time period of the claim must be presented to the 

jury with clarity so as to avoid the ambiguity” of an unaddressed gap between the period for which evidence has 

been presented and the date of the jury verdict.387 The trial 

court “may award supplemental damages in light of that gap 

period.”388

Once the verdict is returned, counsel for the parties 

should be given sufficient time to review the verdict to ensure 

there are no inconsistencies. In the event of any inconsistency, the court should confer with the parties concerning 

how best to address the inconsistency before dismissing the 

jury.

 

387. Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1378 (Fed. Cir. 

2015).

388. Id.
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VIII. Posttrial

A. Renewed JMOL Motions, Motions for New Trial and

Remittitur

Following the return of the verdict, the court should hear and 

decide any renewed motions for judgment as a matter of law, 

pursuant to Rule 50. The court should set a briefing schedule 

that allows ample time to fully and fairly brief the issues.

The function of a renewed JMOL motion is not to allow the 

court to substitute its own judgment for that of the jury, but 

rather to allow the court to reconsider the legal issues raised 

earlier and assess whether the jury had a legally sufficient evidentiary basis to find as it did. Movants therefore should not 

reargue the evidence that could have justified a different result, but rather should focus on whether the evidence was 

sufficient to support the verdict. In patent cases, such motions often address issues of lost profits, reasonable royalty, 

and collateral sales.

A motion for new trial often is filed with the posttrial JMOL 

motion. Rule 59 authorizes a district court, on timely motion, 

to grant a new trial “for any reason for which a new trial has 

heretofore been granted in an action at law in federal 

court.”389 A court deciding a motion for new trial in a patent 

infringement case applies the law of the regional circuit, 

which often provides that the trial court may grant a new trial 

“where the verdict is against the clear weight of the evidence.”390 The court’s authority also extends to “overturning 

 

389. Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 433 (1996).

390. Aero Prods. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1016–17 (Fed. 

Cir. 2006) (citing Seventh Circuit law for “against the clear weight of the evidence” 

standard); Shockley v. Arcan, Inc., 248 F.3d 1349, 1362 (Fed. Cir. 2001) (citing Fourth 

Circuit law for “against the clear or great weight of the evidence” standard) (internal 

quotation marks omitted). In patent cases, motions for new trial often challenge the 

testimony of damages experts. Although “the jury is entitled to believe one expert 

over the other,” where the testimony of the expert on which the jury relied is inconsistent with the law, the verdict may warrant a new trial under the relevant circuit 

standard. See Nordock, Inc. v. Sys. Inc., 803 F.3d 1344, 1356 (Fed. Cir. 2015).
VIII. Posttrial

113

verdicts for excessiveness and ordering a new trial without 

qualification, or conditioned on the verdict winner’s refusal 

to agree to a reduction (remittitur).”391 Consistent with the 

parties’ Seventh Amendment right to jury trial, any discretionary offer by the court to reduce a verdict must be accompanied by an offer to grant a new trial.392 The same is not true 

if the verdict, or a portion thereof, is based upon an erroneous ruling of law, and remittitur without the option of a new 

trial may be proper in that circumstance.393

B. Ongoing Royalties

Where a trier of fact has found infringement, a court may consider “several types of relief for ongoing infringement”—that 

is, for infringement that continues after entry of judgment:

(1) it can grant an injunction; (2) it can order the parties to 

attempt to negotiate terms for future use of the invention; 

(3) it can grant an ongoing royalty; or (4) it can exercise its 

discretion to conclude that no forward-looking relief is appropriate in the circumstances.394

The court’s decisions on these issues are reviewed for abuse 

of discretion.395 Even under this highly deferential standard of 

 

391. Minks v. Polaris, 546 F.3d 1364, 1370 (Fed. Cir. 2008) (quoting Gasperini, 518 

U.S. at 433). The Federal Circuit follows the “maximum recovery rule,” which permits 

the trial court to grant remittitur “which remits an excessive jury award to the highest amount the jury could properly have awarded based on the relevant evidence.” 

Shockley, 248 F.3d at 1362, quoting Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 

519 (Fed. Cir. 1995). Of course, a request for remittitur should be denied when substantial evidence supports the jury verdict. Interactive Pictures v. Infinite Pictures, 

274 F.3d 1371, 1386 (2001); see also i4i, 598 F.3d at 857 (a damages award can be set 

aside only when the award exceeds the “maximum amount calculable from the evidence”).

392. Minks, 546 F.3d at 1370.

393. Id. at 1371.

394. Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 35 (Fed. Cir. 2012); 

Paice v. Toyota Motor Corp., 504 F.3d 1293, 1314–15 (Fed. Cir. 2007) (“Under some 

circumstances, awarding an ongoing royalty for patent infringement in lieu of an injunction may be appropriate,” but such relief is not granted as a matter of course 

whenever a permanent injunction is not imposed.). The law regarding injunctive relief in patent infringement cases is beyond the scope of this guide.

395. WhitServe, 694 F.3d at 35.
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review, however, the trial court must articulate the basis for 

its decisions regarding prospective relief; otherwise, there is 

no basis for the appellate court to determine if the trial court 

abused its discretion, and the issue likely will be remanded 

for further consideration and explanation.396

In most cases where the district court determines that an 

ongoing royalty would be appropriate, the Federal Circuit has 

suggested that the court should first allow the parties to negotiate a license between themselves regarding future use of 

a patented invention.397 If the parties are not able to come to 

terms, the Federal Circuit has suggested that the court then 

may step in to assess a reasonable royalty.398

An ongoing royalty is a form of equitable relief.399 Thus, 

where a court concludes that imposition of such a royalty is 

appropriate, the parties are not entitled to a jury trial to determine the amount of the royalty.400 The trial court may take 

additional evidence, if necessary, to account for any additional factors arising out of the imposition of an ongoing royalty.401

Where the court elects to assess an ongoing reasonable 

royalty, it is not bound to apply the prejudgment royalty rate 

 

396. See Paice, 504 F.3d at 1315 (vacating and remanding award of ongoing royalty of $25 per unit; “without any indication as to why that rate is appropriate, we are 

unable to determine whether the district court abused its discretion”); WhitServe, 

694 F.3d at 35–36 (vacating denial of relief for ongoing infringement and remanding 

for trial court “to address the propriety of prospective relief and to explain any decision it makes with respect thereto”; the trial court is not required to award an ongoing royalty where it denies an injunction, but it “must adequately explain why it 

chooses to deny this alternative relief when it does so”); Amado v. Microsoft Corp., 

517 F.3d 1353, 1362 (Fed. Cir. 2008) (vacating $0.12 per unit ongoing royalty and remanding for further consideration; because the trial court did not explain its ongoing 

royalty award, the appellate court could not determine if the award was a reasonable 

exercise of discretion).

397. Paice, 504 F.3d at 1314; Telcordia Techs., Inc. v. Cisco Sys., Inc., 612 F.3d 

1365, 1379 (Fed. Cir. 2010) (“the court may, and is encouraged, to allow the parties 

to negotiate a license”) (citing Paice, 504 F.3d at 1314).

398. Paice, 504 F.3d at 1315; Telcordia, 612 F.3d at 1379.

399. Paice, 504 F.3d at 1313 n.13.

400. Id. at 1317.

401. Id. at 1315.
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115

found by the jury.402 There is a “fundamental difference,” the 

Federal Circuit has said, between a reasonable royalty for preverdict infringement and damages for postverdict infringement.403 “[P]re-suit and post-judgment acts of infringement 

are distinct, and may warrant different royalty rates given the 

change in the parties’ legal relationship and other factors.”404

Where the jury’s damages award at trial already compensates for future infringement—for example, where the damages award was based on a lump-sum, paid-up royalty—no 

ongoing royalty would be appropriate.405 It therefore is advisable for the jury verdict form to reflect whether any damages 

awarded are based on a running royalty or a lump-sum paidup royalty, or otherwise to make clear whether a damages 

award includes compensation for future infringement.406

The amount of supplemental damages following a jury 

verdict is committed to the court’s discretion.407 The Federal 

Circuit has not yet described the analysis to be applied to the 

amount of ongoing royalties in lieu of a permanent injunction. 

 

402. Amado, 517 F.3d at 1361–62.

403. Id. at 1361.

404. Paice, 504 F.3d at 1317; see also Amado, 517 F.3d at 1362 (“different economic factors are involved” after judgment of validity and infringement is entered).

405. See Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1377–79 (Fed. 

Cir. 2017) (affirming denial of accounting and ongoing royalties because jury’s award 

included royalties for “past, present, and ongoing infringement”); Summit 6, LLC v. 

Samsung Elecs. Co., 802 F.3d 1283, 1300–01 (Fed. Cir. 2015) (affirming denial of ongoing royalty “because the jury award compensated [patentee] for both past and future 

infringement through the life of the patent”); WhitServe, 694 F.3d at 19 (suggesting 

posttrial relief for ongoing infringement would be inappropriate where jury’s damage 

award covered future infringement). Cf. Innogenetics, N.V. v. Abbott Labs., 512 F.3d 

1363 (Fed. Cir. 2008) (vacating permanent injunction where jury’s damages award 

included “market entry fee” that assumed future sales of infringing product).

406. But see Telcordia, 612 F.3d at 1378 (although verdict form is not clear 

whether the jury compensated the patentee for both past and ongoing infringement, 

the district court has broad discretion to interpret an ambiguous verdict form and is 

in position to assess whether verdict compensated for ongoing infringement; the trial 

court’s finding that the verdict compensated only for past infringement is not clearly 

erroneous).

407. SynQor Inc. v. Artesyn Techs., Inc., 709 F.3d 1365, 1384 (Fed. Cir. 2013) (citing Amado, 517 F.3d at 1362 n.2).
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In connection with a stay of injunction pending appeal, however, the Federal Circuit has explained,

When a district court concludes that an injunction is warranted, but is persuaded to stay the injunction pending an 

appeal, the assessment of damages for infringement taking 

place after the injunction should take into account the 

change in the parties’ bargaining positions, and the resulting change in economic circumstances, resulting from the 

determination of liability—for example, the infringer’s likelihood of success on appeal, the infringer’s ability to immediately comply with the injunction, the parties’ reasonable 

expectations if the stay was entered by consent or stipulation, etc.—as well as the evidence and arguments found material to the granting of the injunction and the stay.408

The ongoing royalty may not be capped based on the infringer’s profit margins.409

A court may also choose to temporarily stay an injunction 

to give the infringer an opportunity to design around the patent while phasing out its infringing product. The patentee 

can be awarded a “sunset royalty” for the continued infringement during this “sunset” period.410 Whereas an ongoing royalty is awarded in lieu of an injunction, a sunset royalty is 

awarded to compensate for the period of time when an injunction is temporarily stayed postverdict.411 Although a sunset 

royalty is distinct from an ongoing royalty, the Federal Circuit 

has stated that the same type of calculation and analysis applies to both.412

 

408. Amado, 517 F.3d at 1362.

409. Douglas Dynamics, LLC v. Buyers Prods. Co., 717 F.3d 1336, 1346 (Fed. Cir. 

2013) (“The infringer’s selling price can be raised if necessary to accommodate a 

higher royalty rate, and indeed, requiring the infringer to do so may be the only way 

to adequately compensate the patentee for the use of its technology.”).

410. ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1342 

(Fed. Cir. 2012).

411. See id. at 1343 (vacating the district court’s injunction and remanding for 

determination of an appropriate ongoing royalty instead of a sunset royalty).

412. Id. (stating that the analysis for determining an ongoing royalty is “much 

the same” as the analysis for determining a sunset royalty). 
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117

In view of this relatively sparse guidance, courts should 

take evidence on the amount of royalty appropriate under the 

changed circumstances involved in postverdict infringement. 

Some courts have given the jury the role of determining royalties for both past and future infringement. Whether the 

court takes evidence as part of the trial or after the verdict is 

a matter of discretion.

C. Findings of Fact and Conclusions of Law

Although Rule 52 identifies situations in which findings of fact 

and conclusions of law are mandated, the court should take 

care in all cases tried to the bench to provide as complete a 

record as possible for review on appeal, so as to avoid remands resulting from the Federal Circuit’s lack of sufficient 

basis for application of the standards of appellate review.413

The Federal Circuit does not hesitate to remand damages 

judgments from bench trials for an explanation of the underlying evidence and reasoning.414

 

413. ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572, 1578 (Fed. Cir. 1984); 

see also Pullman-Standard v. Swint, 456 U.S. 273, 291–92 (1982) (if trial court fails to 

make findings, judgment should be vacated and remanded).

414. See, e.g., Heeling Sports Ltd. v. US Furong Int’l Inc., 319 F. App’x 905, 908 

(Fed. Cir. 2009) (nonprecedential) (vacating trial court’s damages award and remanding for explanation); Amado, 517 F.3d at 1362 (vacating trial court’s damages 

escrow award and remanding for reconsideration and explanation); Paice, 504 F.3d 

at 1315 (vacating, for lack of reasoning, trial court’s award of ongoing royalty in lieu 

of injunction and remanding for reevaluation of royalty rate).
The Federal Judicial Center

Board

The Chief Justice of the United States, Chair

Magistrate Judge Tim A. Baker, U.S. District Court for the Southern District of Indiana

Judge Curtis L. Collier, U.S. District Court for the Eastern District of Tennessee

Chief Judge Barbara J. Houser, U.S. Bankruptcy Court for the Northern District of 

Texas

Judge Kent A. Jordan, U.S. Court of Appeals for the Third Circuit

Judge Kimberly J. Mueller, U.S. District Court for the Eastern District of California

Judge George Z. Singal, U.S. District Court for the District of Maine

Judge David S. Tatel, U.S. Court of Appeals for the District of Columbia Circuit

James C. Duff, Director of the Administrative Office of the U.S. Courts

Director

Judge Jeremy D. Fogel

Deputy Director

John S. Cooke

About the Federal Judicial Center

The Federal Judicial Center is the research and education agency of the federal judicial system. It was established by Congress in 1967 (28 U.S.C. §§ 620–629), on the 

recommendation of the Judicial Conference of the United States.

By statute, the Chief Justice of the United States chairs the Center’s Board, 

which also includes the director of the Administrative Office of the U.S. Courts and 

seven judges elected by the Judicial Conference.

The organization of the Center reflects its primary statutory mandates. The Education Division plans and produces education and training for judges and court 

staff, including in-person programs, video programs, publications, curriculum packages for in-district training, and Web-based programs and resources. The Research 

Division examines and evaluates current and alternative federal court practices and 

policies. This research assists Judicial Conference committees, who request most 

Center research, in developing policy recommendations. The Center’s research also 

contributes substantially to its educational programs. The Federal Judicial History 

Office helps courts and others study and preserve federal judicial history. The International Judicial Relations Office provides information to judicial and legal officials 

from foreign countries and informs federal judicial personnel of developments in international law and other court systems that may affect their work. Two units of the 

Director’s Office—the Information Technology Office and the Editorial & Information 

Services Office—support Center missions through technology, editorial and design 

assistance, and organization and dissemination of Center resources.