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Determining Damages
Posted by Anonymous . updated on 2/26/2009
I've been trying to do some research on a matter, and I'm a little stuck.
Lets say Company X and Y both have patents on a technology that they license out to third parties. The third party can use either patent to sell their product in the market. Let's say for example they are both methods of processing a HDTV signal and they license to TV manufacturers. And there is no difference other than the way they process the signal, the end result is not different for the consumer.
Company X has a patent which it licenses out for $1 per unit sold. Company Y has a patent which it licenses out for $10 per unit sold.
If it is later determined that Company X is infringing Company Y's patent, would X have to pay Y $9 in damages per unit sold? If the only factor in determining the licensing cost is economics and supply and demand, how are damages calculated? Is it lost profit, or a reasonable rate?
Additionally, is there anything X can put in its licensing provisions to protect itself from a situation like this?
I've read the articles you have written and many other law review articles. Nothing states how a company like X can protect itself from a situation like this.
Answers (1)
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Isaac
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Quote If it is later determined that Company X is infringing Company Y's patent, would X have to pay Y $9 in damages per unit sold?
If company X's only activity is licensing it's patent, such activities might well not be infringing if X had no idea about Y's patent and did not induce its customers to infringe Y. Maybe you need to come up with a differnt example that includes X doing something like actually making an infringing component for sale.
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