Post here. The whole thing is worth reading, and includes a link to the recent Model Patent Jury Instructions published by the Federal Circuit Bar Association (not by the Federal Circuit itself, however, as the post suggests), which have a section on reasonable royalties stating inter alia that
In determining the reasonable royalty, you should consider all the facts known and available to the parties at the time the infringement began. Some of the kinds of factors that you may consider in making your determination are:
(1) The value that the claimed invention contributes to the accused product.
(2) The value that factors other than the claimed invention contribute to [the accused product].
(3) Comparable license agreements, such as those covering the use of the claimed invention or similar technology (p.72).
Note, however, that the instructions go on to say that "No one factor is dispositive and you can and should consider the evidence that has been presented to you in this case on each of these factors. You may also consider any other factors which in your mind would have increased or decreased the royalty the alleged infringer would have been willing to pay and the patent holder would have been willing to accept, acting as normally prudent business people."
In addition, the post notes comments by Nicholas Groombridge and by Brian Pandya which I read as suggesting that when courts award reasonable royalties (which are based on an assumption of validity and infringement) or ongoing royalties in lieu of injunctive relief (which are calculated only after the patent has been found valid and infringed), they should either apply a multiplier to the rate set forth in comparable licenses (on the theory that the rate negotiated in a real-world license typically will reflect a discount for the possibility of invalidity or noninfringement) or use a settlement agreement (though in my view this raises a risk that the rate will also reflect holdup value). These comments echo a proposal recently made in a very interesting paper by Professor Jonathan Masur, which I previously mentioned on this blog here.
Link to the Fordham IP Conference website here.
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