Blogging Break

As we head into November, I have a great deal of work to do finishing up classes, preparing my exams, preparing for some upcoming talks, and (I expect) reviewing edits for my two forthcoming books.  I therefore will be taking a two-week break from blogging.  I plan to resume the week of November 17.

Damages for Industrial Property Infringement in France

Grégoire Desrousseaux, Mayeul Ottaviani, and Louis Jabert have published an article titled L’évaluation du prejudice de la contrefaçon devant les juridictions françaises, Propriété Industrielle (“Quantifying infringement harm before the French courts”), Sept. 2025, pp. 15-26.  I highly recommend the article to anyone who wants to understand how the French courts calculate damages for the infringement of patents, trademarks, and designs.  The abstract reads as follows (my translation):

 

The transposition into French law of the damages calculation rules of Directive 2004/48/CE has caused a lot of ink to flow.  The authors have attempted an empirical, cross-sectional approach for the amount and calculation of damages, in compiling the accessible decisions rendered between 2016 and 2025 concerning patents, trademarks, and design and models.  An objective was to analyze, concretely, how the parties and the courts make use of the economic factors (often incomplete) to which they have access, to justify their demands and to guide their decisions.  Another objective was to try to identify—if they exist—the most common methods of calculation.

The article is enlightening.  The authors identified 52 decisions from the relevant time period, decided by courts of first or second instance (juridictions du fond), consisting of 26 patent decisions, 19 trademark decisions, and 7 involving designs and models.  They divide these into two basic categories, paragraph 1 and paragraph 2, reflecting the division set forth in the relevant statutory provisions for patents, trademarks, and designs, which for all three reads the same, to wit (again, my translation):

            For assessing damages and interest, the court takes into account distinctly:  (1) the negative economic consequences of the infringement, including lost profits and the loss sustained by the injured party; (2) the moral prejudice incurred by the latter; and (3) the profits realized by the infringer, including the intellectual, material, and promotional investments which the latter has derived from the infringement.

    

            However, the court may, alternatively and upon request by the injured party, award damages as a lump sum.  This amount is higher than the royalties or fees that would have been due if the infringer had requested authorization for the use of the right infringed.  This sum does not exclude compensation for moral prejudice inflicted upon the injured party.

According to the authors, 45 of the 52 cases (87%) made use of the first paragraph, and only 7 (13%) the second.  Of those falling into the first class, they found 4 that (wrongly, in their view) cumulated (that is, added together, if I understand correctly) lost profits with infringer’s profits.  15 were based on lost profits, 24 on infringers’ profits, and 2 used a mixed methodology (meaning that the amount awarded fell in between lost profits and infringers’ profits).  They describe the formula for lost profits as follows:  (1) the number of infringing products sold by the infringer, (2) multiplied by the price at which the plaintiff would have sold those products, (3) multiplied by the plaintiff’s profit margin, (4) multiplied by the taux de report—a term I find difficult to translate into idiomatic English, but which they define as the percent of the infringing products the plaintiff would have sold but for the infringement—(5) multiplied by the taux de pondération (the percent by which the infringed right contributed to the infringer’s sales).  The formula for calculating the infringer’s profits is:  (1) the number of infringing products sold by the infringer, (2) multiplied by the price at which the infringer sold them, (3) multiplied by the infringer’s profit margin, (4) multiplied by the taux de pondération.   They also find that plaintiffs frequently request and frequently are granted some amount for moral prejudice.  Finally, they remark that courts have a fair amount of discretion in applying the rules; they do not have to follow a strictly mathematical rule, and sometimes the relevant evidence (e.g., of consumer  behavior) have to be estimated qualitatively rather than quantitatively.

Judge Connolly on Willful Infringement

U.S. District Court Judge Colm Connolly’s October 14 opinion in Inari Medical, Inc. v. Inquis Medical, Inc., has received attention on both Bloomberg Law and Law360, and I thought I should say a few words about it myself.  (For those who are not familiar with him, Judge Connolly sits in the District of Delaware.  He is probably best known in patent circles for his standing orders, requiring parties to provide information concerning litigation financing arrangements.  According to the Law360 article, moreover, he is “the nation’s third-busiest judge for patent litigation.”)  His decision in Inari addresses two questions that have divided the federal district courts, and that the Federal Circuit has yet to take up.  Both involve what I have sometimes referred to as the “timing” question.

“The first issue is whether the complaint filed in a lawsuit can provide the required knowledge for claims asserted in the lawsuit of post-suit indirect infringement and demands for willfulness-based enhanced damages”; or whether, instead, such knowledge must exist prior to suit.  As Judge Connolly notes, some judges (including Judge Connolly himself in at least one previous decision, as well as Judge Alsup in the Sonos v. Google litigation) have held that knowledge must precede the filing of the lawsuit.  Others, including the District of Delaware’s Magistrate Judge Christopher Burke, have held that, while knowledge must exist prior to the filing of the lawsuit, judges should permit the patentee to amend its suit to allege willful infringement if the infringement continues after service.  And some—including Federal Circuit Judge Bryson, sitting by designation in the District of Delaware, and Judge Alan Albright) don’t even require an amendment.  On this issue, Judge Connolly sticks to his guns, reasoning that the plaintiff could file a second suit if the defendant continues infringing after service of the complaint.  This would be preferable, in his view, because it “avoid[s] thorny privilege and attorney work product issues that arise when a defendant relies on the opinions of its trial counsel to form its own opinion about whether it infringes the asserted patents”; in addition, “[t]he results of the first suit and estoppel doctrines would likely reduce substantially the scope of the second suit.”  Judge Connolly also isn’t persuaded by the plaintiff’s argument that his ruling is undesirable, insofar as it might induce more plaintiffs to send pre-suit notices of infringement, which in turn will enable accused infringers to file actions for declaratory judgments in the latter’s preferred venues; in the court’s view, this consequence appears neither unfair nor unwise.

“The second issue is whether a district court has the authority to address in the context of resolving a Rule 12(b)(6) motion a request by the defendant to preclude the plaintiff from pursuing enhanced damages under § 284 based on the plaintiff’s failure to plead adequately a claim of willful infringement.”  On this issue, Judge Connolly had previously held that the answer was yes, but he has now reconsidered, writing that “Regardless of whether a demand for enhanced damages under § 284 is based on willful conduct or on behavior that is wanton, malicious, deliberate, consciously wrongful, flagrant, done in bad faith, or characteristic of a pirate, such a demand is not a claim that can be dismissed pursuant to Rule 12(b)(6),” because enhanced damages are a remedy, not a claim upon which relief may be granted.  “Thus, assuming the complaint sufficiently alleges a claim of patent infringement, a plaintiff preserves its rights to seek enhanced damages for that infringement under § 284 with a simple demand for such damages in the complaint.”  As a practical matter, this would mean that if the plaintiff doesn’t have the factual basis for alleging pre-suit willful (or whatever) infringement in the complaint, but gains such information through discovery, it can elicit those facts at trial and request a finding of willfulness.  (It would have to amend its complaint to assert a claim for induced infringement, however, if it acquires facts it didn’t previously have that would support that type of claim going forward.)  Given the first holding above, however, in a given lawsuit willfulness cannot be based on the knowledge of the patent that the defendant gained solely from the filing of the complaint (though the latter might enable the plaintiff to file a second lawsuit seeking enhanced damages for post-complaint continuation of infringing conduct). The Bloomberg article suggests that this second holding could make it more difficult for parties to settle, since it increases the potential range of damages that could be awarded at trial, but also notes that some questions of potential entitlement to enhanced damages might be resolved post-discovery on a motion for summary judgment even if not on a motion to dismiss.    

Based on these holdings, the judge granted the defendant’s motion to dismiss a claim of induced infringement without prejudice and with leave to amend, and denied the motion to dismiss the “claim” for enhanced damages. 

The EWHC’s Ex Parte Order Against InterDigital

As noted here two weeks ago, following reports on ip fray, the Mannheim Local Division of the Unified Patent Court and the Munich Regional Court both recently entered ex parte orders forbidding Amazon from pursuing a declaration of entitlement to an interim FRAND license from the High Court of England and Wales.  In response, it was reported a few days ago, Amazon obtained an ex parte order from the Patents Court for England and Wales, enjoining InterDigital (on an interim basis, prior to an inter partes hearing next week) from trying to prevent Amazon from pursuing “Final Relief” (a declaration of the terms of a FRAND license and possibly an order of specific performance) against InterDigital in its action in the EWHC.  Mr. Justice Meade explains his reasoning here, stating inter alia that Amazon is complying with the Munich and Mannheim orders not to pursue an interim license in the U.K.  Amazon’s concern, he writes, is rather that “InterDigital may be formulating a position or an application to either the UPC in Mannheim or the German national court in Munich (or both, as before, or some other court):  an application to restrain Amazon from carrying on its claim to the substantive, final RAND relief, which remains within these proceedings” (para. 13).  (The judgment also sets out, in para. 22 et seq., a concise summary of English law relating to the entry of antisuit injunctions, though Mr. Justice Meade characterizes his order as an anti-antisuit injunction.) ip fray suggests, however, that the Munich and (possibly) the Mannheim judgments might be understood as implicitly forbidding Amazon from pursuing final relief in the U.K. (see discussion here and here).  I’m not in a position to evaluate whether it is likely the Munich and Mannheim decisions would be so interpreted under German (or still-to-be-determined UPC) law; I take it that Mr. Justice Meade is proceeding on the assumption that those orders are limited to the explicit prohibition on interim licenses, and that he views his order as a prophylactic one to prevent InterDigital from obtaining an order, somewhere, forbidding Amazon from litigating the matter to final judgment in the U.K.  But how all of this will play out after upcoming inter partes hearings in the U.K. and Germany, I cannot begin to guess.   

Jüngst and Schroeder on Damages for Wrongly-Issued Preliminary Injunctions in the UPC

I commend to readers’ attention an article by Oliver Jan Jüngst and Moritz Schroeder titled ֦PI damages֞:  Revocation of provisional measures and compensation of the Defendant under R.213.2 RoP, 2025 GRUR Patent 340.  Here is the abstract:

The tide can turn in any patent case for various reasons – e.g. if a patent is revoked at some point.  Yet, what can be done to compensate for damages incurred by a party because of provisional measures being granted on the basis of said patent?  The economic consequences of such a measure can be severe and hence, a compensation mechanism is necessary to strike a fair balance between the interests of right holders and other parties as emphasized in the UPCA considerations.  While the RoP indeed provide for a compensation in R. 213.2 RoP, once again, the specific assertion raises many questions, some of which are presented here.

The authors state that, to their knowledge, there are at present no cases in which the UPC has addressed the compensation due to a defendant who is preliminarily enjoined on the basis of a patent that is subsequently determined to be invalid or not infringed; and the wording of the relevant provisions, namely article 60(9) of the UPCA (read in conjunction with article 62(5)) and Rule 213.2 of the Rules of Procedure, require some interpretation.  The authors suggest that there may be no uniformly correct answers in regard to the court (first instance or appellate) in which the claimant should seek relief, or the deadline for filing its claim   And while they do not discuss the CJEU’s decision in Mylan v. Gilead (previously noted on this blog here), which holds that a regime of strict liability is compatible with IPRED article 9(7)—and they note that the wording of Rule 213.2 suggests a discretionary standard (“. . . the Court may order”)—they imply that it might make sense for the UPC “to ‘mirror’ its developing practice of allowing injunctions on a regular basis . . . via also regularly finding the general liability of a PI applicant under R. 213.2 RoP if a PI is lifted at a later stage.”  They also suggest that, in an appropriate case, liability could include not only the accused infringer’s lost profits but also other expenses incurred as a result of the injunction, and (perhaps) even losses suffered outside the UPC territory if these are caused by the injunction.

In the same issue of GRUR is Hans-Jürgen Ahrens’ article Schadensersatz nach aufgehobener einstweiliger Verfügung wegen nichtigen Arzneimittelpatents—zugleich Besprechung von BGH GRUR 2025, 574—Glatirameracetat (“Damages following a preliminary injunction vacated on the basis of an invalidated drug patent—the German Federal Supreme Court’s Decision in Glatiramer Acetate, GRUR 2025, 574").  The decision under consideration—BGH, Judgment of March 13, 2025,  IX ZR 201/23, previously noted on this blog here under the heading “Update” —holds, inter alia, that consistent with previous German case law and the Mylan decision, the patentee can be held strictly liable to the wrongly-enjoined party for the latter’s damages attributable to the injunction, though not (as a general matter) the patentee is not liable to affected third parties (here, a sister corporation of the accused infringer to whom the latter had leased its business); and that the claimant cannot also recover the patentee’s profit attributable to the wrongly-issued injunction (though it may be possible for the amount of the patentee’s profit to serve as evidence of the claimant’s damages, if I understand correctly).  (Regarding the issue of recovering the patentee's profits, cf. the recent EWHC decision to similar effect, noted here.)    

Merges on Lost Profits and Reasonable Royalties

Rob Merges’ paper Lost Profits and Reasonable Royalties:  Two Distinct Remedies for Two Separate Harms, 40 Berkeley Tech. L.J. 323 (2025), is now available on the journal’s website.  (I was favorably impressed with an earlier version of the paper, which I blogged about here.)  Here is the abstract:

I argue that the two types of damages described in the Patent Act are more than a menu of compensatory options. They describe two distinct types of harm caused by patent infringement. Each comes with a distinctive cluster of remedies. Harm to Product Markets (HPM) is redressed by lost profit damages, and in most cases a permanent injunction against future infringement. This type of damages can be thought of as the mirror image of damages for violations of antitrust law. Antitrust cases are about illicit lack of competition: a wrongful reduction in the competitive state of a product market. Patent damages are about illicit competition: the presence of an unauthorized competitor (the infringer) wrongly increasing the level of competition in the market for the patented item. Odd as it may seem to students of microeconomics, HPM damages are all about giving compensation for interference with a virtuous, or at least statutorily protected, monopolist.

 

The other type of harm, Lost Licensing Opportunity (LLO), occurs when a patent owner is not a participant in the product market for products embodying the patented invention. The traditional remedy of a reasonable royalty is applied in these cases: the law in effect writes a hypothetical contract in which the patent owner licenses its patent to the infringer. Compensation takes the form of an estimate of the value the infringer gained by using the patent owner’s technology as an input. When the input adds real value, and the patent owner is a repeat-player, specialized research and licensing company, the reasonable royalty measure of damages does much the same as HPM damages. The only difference is that damages in LLO cases are measured in markets for patent licensing, rather than for patented products.

 

But not all LLO harm is truly equal. Not all involuntary conferral of benefits should be thought of as the equivalent of a market exchange. Restitution emerged as a distinct branch of equity to address just this issue. Restitution principles reflect the fact that sometimes a benefit is conferred not on a willing market participant, but on a recipient who never asked for the “benefit” and had no effective notice of it; would prefer not to have received it; and in some cases is the victim of strategic, opportunistic tactics that make “receipt” of the benefit unavoidable. One example from patent law is when a patent owner alters patent boundaries to capture some of the value of the recipient’s own contributions. I call this “engineered encroachment.” In most contemporary private law interactions, the law protects the innocent defendant by requiring fault or intent before liability is imposed. But lack of notice, and the good vs. bad faith of the patent owner, are irrelevant in patent law’s regime of strict liability for direct infringers. My proposal here is for courts to sort out the different types of LLO harm using traditional principles of restitutionary recovery. When a patented, intangible input (benefit) is used (received) by an infringer, patent courts should deploy the full spectrum of restitutionary doctrine in pursuit of interparty fairness under the facts of each infringement case. In extreme cases of “engineered encroachment,” for example, courts might deny any recovery for infringement.

I don’t have much to add in addition to my comments from last year’s blog post on the draft version of the article.  One thing that struck me forcefully on reading the published version, however, was this portion from near the end of the paper, where Professor Merges argues against U.S. patent law’s turn towards formalism:

What’s needed, in my view, is patent law heresy. We need a little more wiggle room in at least parts of patent law. Formalism—or better, a stale formalism—stands in the way of flexibility, adaptability. Rules dominate over standards, when sometimes it ought to be the reverse. It seems at least odd, if not in fact heretical, to argue for the exercise of more judicial discretion. That goes against the grain of patent law in the Federal Circuit era. And it raises the anti-democratic specter of elite Platonic Guardians—monarchs in black robes—who are in charge because “they know better.” I realize all that.

 

But I have two extremely powerful responses. First, ironically perhaps, is history: patent law has always been a flexible and adaptable body of law. It has not, traditionally, been (as the Supreme Court put it in a not-long-ago opinion) “the prisoner of a formula.” Most notably, federal judges have at times invented doctrine out of thin air. In response to felt needs, they made up more stringent tests for patentability [citing to the origins of the nonobviousness doctrine], resolved a knotty issue of follow-on inventions [citing to the origins of the rule against double patenting], adapted remedies (as we have seen) to fit different types of patent-related harms . . . and so on. . . .

 

The second reason to install more flexibility in patent infringement doctrine is that flexible standards will promote true innovation more than the current rigid formalism. This is certainly true when it comes to remedies for LLO-type infringement harm. . . . Engineered patent encroachment may be in some sense legitimate in more than a few cases. But in many others, intentional boundary-shifting to capture third-party contributions will be the real story. There is little social value in this. . . .

 

The kind of balancing I am calling for ensures continued attention to overall fairness, and to the primary goals of the patent system. A conventional objection to this sort of attention to the big picture is that it is subjective, it is unpredictable. But absolute predictability through strict adherence to clear rules can produce unfairness. Especially when clever and creative actors take advantage of strict rules to manufacture an injustice (as, arguably, small component patent owners did when receiving a permanent injunction, pre-eBay). To prevent the “gaming” of rules, it is sometimes necessary to resort to meta-rules or principles whose very purpose is to modify strict rules when they lead to an unfair outcome [citing to Henry Smith, Equity as Meta-Law, 130 Yale L.J. 1050, 1080-81 (2021)].

I am inclined to agree.  Especially in this era of hyper-textualism, it is important to recognize that many familiar doctrines of patent law originated as judge-made common law, and that even the current statute leaves many gaps that have to be filled by judicially-crafted doctrine.  There is, to be sure, some risk that too much flexibility, balancing, and resort to multi-factor standards (as opposed to bright-line rules) will result in unpredictable, inconsistent, arbitrary, ad hoc, uninformed, or otherwise unwise results (as Merges recognizes).  But especially in IP law, some degree of “ad hockery” is inevitable, as Learned Hand pointed out more than once in the context of IP law.  More generally, in my view, judging sometimes requires the exercise of, well, judgment, as opposed to mechanical application of formal rules; and much the same reasoning underlies the civil law’s abuse of right doctrine, as I understand it from my reading of the work of Amandine Léonard and others.  That said, the debate is unlikely to be resolved anytime soon, if ever; and for a thoughtful discussion of a contrasting perspective, primarily within the context of copyright law, I recommend taking a look at Norman Siebrasse's paper Against Balancing, 35 IPJ 181 (2023).       

Harvard JOLT Issue on IP Remedies

Volume 38, Issue 3 of the Harvard Journal of Law & Technology is titled “The Role of Intellectual Property Remedies in the Global Innovation Economy Symposium 2024.”  I’d seen (and noted on this blog) drafts of some of these articles before; among those I hadn’t, and that are deserving of attention, are John Golden’s The Rise of Judicial Ratemaking in Patent Law and Poorna Mysoor’s License Fee Damages and the Nature of IP Rights.  Here is the entire list:

• Comparative Online Bad Guys - Justin Hughes
• The Economic Impact of Patent Holdout - Bowman Heiden & Justus Baron
• Compulsory Licensing Under Actavis - Emily Michiko Morris
• Copyright Social Justice in Service of Art: Lessons from Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith - Lateef Mtima
• Injunctive Relief in Patent Cases: The Impact of eBay - Kristina M.L. Acri née Lybecker
• Reconsidering the Patent Jurisdiction of the International Trade Commission - Jorge L. Contreras
• The Rise of Judicial Ratemaking in Patent Law - John M. Golden
• The World-Wide Retreat on Patent Protection of Bayh-Dole March-In Rights and EU Takeovers of Licensing by Government Decree - Richard A. Epstein
• License Fee Damages and the Nature of IP Rights - Poorna Mysoor
• Capturing Intangibles in a Property Restatement - Christopher M. Newman & Henry E. Smith
• Injunctions for Patent Infringement: Historical Equity Practice Between 1790–1882 - Adam Mossoff