Facts > rules – Federal Circuit rejects familiar formula for patent damages

Description

Abstract: In patent damages cases, the “25% rule” has been widely used to estimate the reasonable royalty rate that the manufacturer of a product using the patent would be willing to offer the patentee in a hypothetical negotiation for a license. It suggests the licensee pay a royalty rate equaling 25% of its expected profits for the product that incorporates the patent. But this article describes one case in which a jury awarded damages based on this rule — an award that the district court deemed excessive. The appeals court concurred, making it clear that these awards must be based on the facts of the case, rather than an abstract formula. Uniloc USA Inc. v. Microsoft Corp., 2010-1035, Jan. 4, 2011 (Fed. Cir.)