UPC Court of Appeal Reverses Moral Prejudice Damages Award

The case is Bhagat Textile Engineers v. Oerlikon Textile GmbH & Co. KG, decided by Panel 1b of the UPC Court of Appeal on December 9, 2025.  In one respect at least it resembles the Federal Circuit decision I blogged about earlier this week, in requiring non-speculative evidence of alleged reputational harm.

Plaintiff Oerlikon owns EP 2145848 for a “false twist texturing machine.”  In July 2023, Oerlikon initiated an action for infringement in the Milan Local Division of the UPC.  That court found Bhagat liable based upon its “promotion and offer to the public of a structuring/textiling machine exhibited at the ITMA trade fair in June 2023 in Milan” (para. 6).  It also entered an injunction and awarded “provisional damages in the amount of €15,000 as a result of reputational  damage to Oerlikon’s image” and “ordered Bhagat to bear 80% of the proceedings costs” (id.) 

On appeal, the court notes that, consistent with IPRED article 13, UPCA article 68 “distinguishes between situations in which the infringer knew or had reasonable grounds to know that he or she was engaging in a patent infringing activity (Art. 68(1) to (3) UPCA) and situations where the infringer did not knowingly, or with reasonable grounds to know, engage in the infringing activity (Art. 68(4) UPCA)” (para. 18).  For the first situation, the court shall award “damages appropriate to the harm actually suffered,” taking into account “all appropriate aspects,such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the injured party by the infringement (Art. 68(3)(a) UPCA) or, alternatively, may decide to set the damages as a lump sum under certain conditions (Art. 68(3)(b) UPCA)” (paras. 19-20).  On the other hand, “[w]here the infringer did not knowingly, or with reasonable grounds to know, engage in the infringing activity, the Court may order the recovery of profits or the payment of compensation (Art. 68(4) UPCA)” (para. 21).  Here, there was no “evidence of negative economic consequences such as lost profits . . . or unfair profits made by Bhagat,” but the parties disagree regarding damages for moral prejudice (para. 22).  First, Bhagat argues that it did not know or have reasonable grounds to know that the product it exhibited at the trade fair was infringing, but the court disagrees:

Bhagat . . . presents itself as an international leading manufacturer of texturing and winding machines (see a press release in the magazine Textile Insights dated 13 July 2023, cited in Oerlikon Exhibit # 20) and is a direct competitor of Oerlikon in the field of textile and winding machines. It actively participated in the ITMA trade fair, which Bhagat does not deny is the most important textile machines trade fair globally, and exhibited a sizable textile machine (the attacked embodiment).

 

It follows that, being an active stakeholder in the industry, Bhagat was at least reasonably expected to monitor the patent landscape before exhibiting its product on the market and should have had reasonable grounds to know about the existence of the Patent and the infringing nature of the attacked embodiment. Failure to do so was at least negligent . . . (paras. 24-25).

Nevertheless, there was no evidence of reputational harm resulting in moral prejudice.  Oerlikon’s evidence consisted merely of “general statements” made by Bhagat about its success at promoting its products at the trade fair; and that further evidence submitted by Oerlikon for the first time on appeal concerning the accused product exhibited at the fair, even if admissible, did not change this result.

On costs, the court affirmed that Bhagat was liable for 80% of Oerlikon's recoverable costs, and Oerlikon 20% of Bhagat's, in accordance with UPCA article 69.  Oerlikon did not cause Bhagat to suffer any unnecessary costs by not first sending a warning letter, given the urgency and the short time frame of the fair.  The specific amount of costs to be recovered, however, will be determined in view of the value of the proceedings, which the court lowered from €750,000 to €250,000 (meaning that recoverable costs cannot exceed €38,000).  

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.

UPC Choice of Law Principles for Damages

Last week the Mannheim Division of the UPC published its decision in Hurom Co. v. NUC Electronics Europe GmbH, establishing some choice of law principles for patent infringement actions filed in the UPC.  There has already been some discussion of the case on JUVE Patent and on ip fray.  The principal question of interest is whether UPC law or national law applies with respect to damages, especially where the infringement is ongoing in the sense that it began prior to the UPC startup date of June 1, 2023 and continued thereafter.  The court’s summary of the decision states, in relevant part, the following:

3. . . . with regard to the determination whether substantive law as laid down in the UPCA or substantive national laws of the UPCA member states applies to acts allegedly infringing traditional European bundle patents, the following applies:

 

a) to acts committed after the entry into force of the UPCA, the substantive law as laid down in the UPCA applies;

 

b) to acts committed before the entry into force of the UPCA, the substantive national laws apply;

 

c) to ongoing acts started before the entry into force of the UPCA and continued after the entry into force on 1 June 2023, the substantive law as laid down in the UPCA applies.

 

4. When assessing whether infringing acts are in that sense “ongoing” and justify the application of the UPCA as a general rule, an overly formalistic approach which runs counter to the aims of the Agreement must not be applied. What is decisive is to categorize such acts not in a formalistic manner which only takes into account, if, when viewed from a pure natural perspective, such acts can be referred to as separable acts, but which looks at the scenario from a normative and therefore evaluative perspective. Before this backdrop it is justified to apply the UPCA as a harmonized set of national law of the contracting member states of the UPCA to ongoing acts, if the infringer continues its infringing behaviour although he could have stopped the infringement in the light of the entry into force of the new regime on 1 June 2023. In that case, however, each party reserves the right to rely on provisions of the national laws for acts before 1 June 2023 being favourable to its position compared to the provisions of the UPCA and the RoP. The party which advances the argument based on national law has to elaborate on such rules of national law and set out with a sufficient degree of substantiation why that rule of national law supports its argument.

 

5. With regard to a right to information, the question of intertemporal applicability and the question of the scope of the period, for which information has to be provided, have to be distinguished. The rights to information provided by the UPCA as laid down in particular in Art. 67 UPCA and Art. 68 (3) (a) (b) UPCA in conjunction with R. 191 sentence 1 alternative 2 RoP are to interpreted to encompass time periods which resided before the entry into force of the UPCA.

Here are a few things that I found interesting.

First, the court concludes that a permanent injunction is appropriate only in the UPC member states in which the patent in suit has been infringed, not the entire UPC (paras. 107-08).

Second, if I am reading this correctly the court implicitly characterizes the law of damages as “substantive” rather than “procedural.”  Under general principles of private international law, as I understand them, even when court concludes that it should apply another state’s substantive law to a particular issue, it usually applies its own procedural law.  But damages law sort of straddles the border between procedure and substance, and there are differing views of whether it should be classified as one or the other.  (See, e.g., the sources I cite in my article Extraterritorial Damages in Copyright Law, 74 Fla. L. Rev. 123, 163 n.204 (2022).)  My own view is that it makes more sense to classify them as substantive, so that if the court is adjudicating foreign patent rights—as courts within the E.U. may have to do now following the Court of Justice’s decision last month in BSH Hausgeräte GmbH v. Electrolux AB, Case C‑339/22—it would apply the foreign state’s damages law.  (That issue will be addressed in this case at a later proceeding, as it relates to damages for the infringement of non-UPC member state patents.  See decision para. 45.)  So I think the UPC is right to conclude that UPC damages law applies to infringement occurring after June 1, 2023, and national damages law to infringements occurring before.  For infringements that span that date, I’m inclined to think that it makes sense to apply UPC law as a default, though as the court indicates, subject to permitting the patent owner and the defendant to argue for more favorable treatment under domestic law.  On the other hand, the right of information is more clearly procedural, and therefore applies to UPC actions involving infringements occurring both before and after the UPC’s entry into force.  Interestingly, the court explicitly characterizes the right to recall and removal of infringing goods from the channels of commerce as substantive (para. 129).

Third, there are a variety of other remedial issues the court briefly addresses, among them (1) the court accepts that injunctive relief is not mandatory but rather may be limited by the principal of proportionality, but here there is no evidence of disproportionality (para. 113); (2) the possibility of damages for moral prejudice is not excluded by virtue of the plaintiff calculated the amount of interim damages it wanted as a reasonable royalty, but there is no evidence here of any such damages having been suffered (para. 119); (3) there is no basis here to award interim damages, to order publication of the decision, to exclude an interim award of costs because the plaintiff didn’t first send a warning letter, or to order security for enforcement pending appeal (paras. 120, 130-35); (4) the fact that the destruction of the infringing goods will have environmental effects is not, by itself, sufficient to reject an order for destruction (para. 126); and (5) damages for pre-grant use of the patent in suit may be available under German domestic law, para. 118 and operational portion B.1).     

Some Recent Scholarship on FRAND, IP Remedies

1. Wentong Zheng has published an article titled Jurisdictional Competition on Standard-Essential Patents, 14 NYU J. Intell. Prop. & Enter. L. 1 (2024).  Here is a link to the article, and here is the abstract:

This Article offers a systematic examination of jurisdictional competition on standard-essential patents (“SEPs”). SEPs are patents essential to technology standards developed by standard-setting organizations (“SSOs”). To reduce potential patent holdup, SSOs generally require SEP holders to commit to licensing SEPs on “fair, reasonable, and nondiscriminatory” (“FRAND”) terms. During the last decade, jurisdictions around the world have been engaged in fierce competition to set the ground rules on FRAND and other requirements for SEP licensing. This Article traces the legal landscape of this jurisdictional competition and examines how three major jurisdictions, the United States, Europe, and China, have developed divergent stances towards the most important legal issues affecting SEP licensing under patent law, contract law, and antitrust law.

 

This Article further challenges the prevailing scholarly assumption that jurisdictional competition on SEPs is socially undesirable. Drawing upon a historical analogy from maritime law in the post-industrial revolution era, this Article argues that jurisdictional competition on SEPs plays a positive role in facilitating compromises between innovator interests and implementer interests. Viewed in this light, jurisdictional competition on SEPs enhances social welfare by producing a “race to the middle” in which competing societal interests are calibrated and balanced.

2. Deming Liu has published an article titled Reflections on Damages for Infringing the Moral Right of Integrity, 2 J. Bus. L. 144 (2025).  The article is available on Westlaw, in the U.K. section.  Here is the abstract:

The article shows that the current court largely ignores the existence of the word honour in assessing infringement for the moral right of integrity; and that the court, in applying the objective test, also ignores the gist of the right and the requirement and spirit of the Berne Convention. It advocates that the court overhauls its stance toward the right of integrity, not only taking on board the issue of honour but also giving the author's own view due consideration. Then, in assessing damages for infringement, the court ought to base its judgment on whether it is a case of prejudice to honour or a case of prejudice to reputation. The article further proposes that additional damages be awarded where justice demands.

3.  Rafał Sikorski has published an article in 47 EIPR 134 (2025), titled Realising the potential of proportionality in patent enforcement: A case for amending IPRED.  This article also is available on Westlaw, in the EU section.  Here is the abstract:

The design of enforcement mechanisms, including remedies, determines the intensity of intellectual property protection. It holds true for patents as well. This article is an attempt to show how to ensure greater role for proportionality in patent enforcement, especially with respect to permanent injunctive relief. Firstly, it examines the growing recognition of proportionality for the enforcement of IP rights in both primary and secondary EU law. Secondly, the author analyses current patent laws and practice of respective national courts in patent infringement disputes. Thirdly, it looks at how proportionality is embraced by legal scholars. In this section the author also shows that there is emerging consensus around the need to apply injunctions in a more flexible manner. The cases of complex products and patent assertion entities are particularly evident examples where application of proportionality is needed. Fourthly, the author proposes revision of the directive on enforcement of intellectual property rights (IPRED) that would ensure that proportionality is properly considered by both national courts as well as the UPC, whose role as the main EU forum for resolving patent infringement disputes is likely to grow. The EU legislator has a number of possible options to ensure greater role for proportionality. These will be analyzed respectively and a proposal that is optimal—in this author’s opinion—shall be presented. Fifthly, the author will discuss implications of modernisation on the UPC. Finally, conclusions will be presented.

4. Also in the current edition of EIPR, Giuseppe Colangelo has published The politicisation of IP protection: the case of standard essential patents, 47 EIPR 121 (2025).  Here is the abstract:

Standard essential patents (SEPs) exemplify the tension between the dual nature of intellectual property, which is both national and international. While standards have a global dimension, patents confer territorial rights, making the implementation of standards geographically constrained. As technical standards are a strategic tool, countries have developed national standards strategies that prioritise securing technological leadership. Unsurprisingly, SEPs have become a geopolitical issue and a significant factor in international tensions. In this context, China’s growing role in international standardisation has further politicised the process of standard-setting. This paper argues, however, that the approaches taken by EU and US courts and policymakers regarding SEPs have inadvertently aided China in effectively implementing its strategy. The paper identifies the root of the problem in the uncertainty surrounding the economic and legal interpretation of fair, reasonable, and non-discriminatory (FRAND) licensing terms, as well as in the willingness of national courts to act as global licensing tribunals. Additionally, the paper investigates whether the ongoing strategies of the US and the EU align with their stated goal of achieving technological leadership.

Federal Circuit Affirms Decision Awarding $228,000 in Damages, No Enhanced Damages, Fees, or Injunction

This morning, the Federal Circuit issued a nonprecedential, per curiam opinion in Fleet Engineers, Inc. v. Mudguard Technologies, LLC and Tarun Surti, affirming the district court’s judgment in every respect.   According to the court, “Surti and Fleet have been locked in acrimonious litigation over mudflaps and Surti’s ’755 patent for over a decade” (p.3).  “Fleet, a manufacturer of products for the trucking industry, brought an action seeking a declaratory judgment that its mudflaps do not infringe the ’755 patent, and that the patent was invalid. . . . Surti counterclaimed, asserting claims of patent infringement, breach of contract, and misappropriation of trade secrets” (p.4).  “The jury ultimately found that although Fleet’s Group B products did not infringe the asserted claims of the ’755 patent, the Group A products did. . . . That infringement, however, was not found to be willful. . . . The jury declined to award lost profits and instead awarded damages based on 4% of the gross sales of the Group A products, amounting to an award of $228,000” (p.5).  Both parties raise various issues on appeal, but for present purposes I will focus only on remedies.  Long story short, the patentee argues that he was entitled to lost profits instead of a royalty, enhanced damages, fees, and a permanent injunction.  The Federal Circuit rejects all of these arguments.

First, as for lost profits and enhanced damages:

Surti . . . asserts that the jury verdict that he was not entitled to lost profits was not supported by substantial evidence. . . . According to Fleet, however, the jury should not have even been presented with the question of lost profits because Surti was a non-practicing entity who had no lost profits. . . .  We agree with Fleet.

 

Surti never assigned his patent to any company, including Mudguard, where he served as president. . . . Nor is there any evidence to suggest that Surti entered into any licensing agreement that could have provided the right to recover lost profits at trial. Moreover, Surti has made no attempt to satisfy the Panduit factors, which require a showing of (1) a demand for the patented product, (2) the absence of acceptable non-infringing substitutes, (3) its manufacturing and marketing capability to exploit the demand, and (4) the amount of profit it would have made. . . .

 

Finally, Surti asserts that the jury verdict finding that Fleet’s infringement was not willful was not supported by substantial evidence. . . . Fleet notes that the actions to which Surti points to make his assertions of willful conduct occurred two years before the asserted patent first issued. . . . Although, as the district court observed, the evidence establishes that Fleet was aware of Surti’s patent application . . . . , “[t]o willfully infringe a patent, the patent must exist and one must have knowledge of it. . . . [A]n application is no guarantee any patent will issue . . . . What the scope of claims in patents that do issue will be is something totally unforeseeable.”

 

The evidence adduced at trial, at best, may demonstrate Fleet’s knowledge of Surti’s patent issuing after Fleet was already selling its Group A products. Yet, even so, knowledge of the asserted patent and evidence of infringement, although necessary, is not sufficient for a finding of willfulness. . . .  Rather, willfulness requires deliberate or intentional infringement. . . . The jury was free to weigh the relevant evidence of record, which included evidence suggesting that Fleet intended to avoid patent infringement. Moreover, even if some evidence existed to draw the opposite conclusion, that does not mean that the jury’s finding of no willfulness was unsupported by substantial evidence. . . (pp. 15-17; citations omitted).

As for fees and injunctive relief:

. . . Surti has been proceeding pro se since 2015 and has provided no evidence of legal fees incurred before that date. . . . Surti also failed to demonstrate that Fleet litigated this case in an unreasonable manner, asserted any plainly frivolous claims, or made any frivolous legal arguments during the course of this litigation causing the case to be exceptional. We therefore conclude that the court did not abuse its discretion in determining not to award Surti attorney fees under § 285.

 

Regarding the requested permanent injunction, Surti asserts that the district court erred in its decision to deny issuing a cease-and-desist order against Fleet. . . . The district court held that Surti did not provide sufficient evidence to support the issuance of a permanent injunction. . . . A finding of infringement does not automatically entitle a patent holder to a permanent injunction. eBay, 547 U.S. at 391−93. Although Surti may have suffered an injury from the sale of an infringing product, that injury was not one of irreparable harm. See Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149 (Fed. Cir. 2011) (holding that, in the context of patent infringement cases, there is no presumption of irreparable harm when a party establishes liability for patent infringement). The district court did not err in determining that Surti’s injury was compensable through the reasonable royalty awarded by the jury.

 

In deciding Surti’s motion for injunctive relief, the district court did not expressly address two of the eBay factors: the balance of the hardships between the claimant and the infringer and whether or not an injunction would serve the public interest. . . . However, Surti did not independently argue those factors. . . . The court therefore did not abuse its discretion in declining to issue a permanent injunction based only on the first two eBay factors.

 

Moreover, the purpose of an injunction is to prevent future infringement. . . . There is no evidence in the record that Fleet continues to sell the infringing products. . . . It was therefore not an abuse of discretion for the district court to have held that, without evidence of future harm, Surti had not sufficiently established entitlement to injunctive relief. . .  (pp. 18-20).

Finally, the patentee “further raises arguments that were not presented at the district court level, such as that he is entitled to additional damages “based on the mental stress this litigation has caused” him” (p.19).  “Because Surti failed to raise the remainder of his arguments adequately in his opening brief or at the district court prior to this appeal, we consider those arguments forfeited” (p.20).

There's nothing here that seems incorrect to me--though it would have been interesting if the court had addressed this last issue, which I discuss briefly in my article on noneconomic damages in IP cases.

Justice Story on Noneconomic Damages in Patent Cases

A few weeks ago I published a paper titled Damages for Noneconomic Harm in Intellectual Property Law, 72 Hastings L.J. 1055-1120 (2021) (available here and here, and previously noted on this blog here).  A few days ago, in the course of researching something else, I was reading a portion of William Robinson's 1890 treatise on the law of patents when I came across the quotation below from Justice Story's opinion in Whittemore v. Cutter, 29 F. Cas. 1123 (C.C.D. Mass. 1813)--which I would have cited in my article, had I been aware of it.  To cut to the chase, Justice Story didn't think it would be appropriate to award damages for emotional harm in a patent infringement.  As discussed in my paper, that is my view as well, though courts in some countries, and some scholars, have expressed the opposite view.  Of course, Justice Story's views about what patent law did and didn't tolerate in 1813--in a case in which he was sitting as a trial court judge--are not binding precedent, though it's also fair to note that courts have continued to cite Story's views on IP and other matters to the present day.  Anyway, here's the quote, with the most relevant portion in italics:

As to the rule, by which the plaintiff's damages are to be estimated, it is clear by the statute, that only the actual damages sustained can be given. By the terms “actual damages,” in the statute, are meant such damages, as the plaintiffs can actually prove and have in fact sustained, as contradistinguished to mere imaginary or exemplary damages, which in personal torts are sometimes given. The statute is highly penal, and the legislature meant to limit the single damages to the real injury done, as in other cases of violation of personal property, or of incorporeal rights. In mere personal torts, as assaults and batteries, defamation of character, &c. the law has, in proper cases, allowed the party to recover not merely for any actual injury, but for the mental anxiety, the public degradation and wounded sensibility, which honorable men feel at violations of the sacredness of their persons or characters. But the reason of the law does not apply to the mere infringement of an incorporeal right, such as a patent, and the legislature meant to confine the damages to such a sum, as would compensate the party for his actual loss. If the jury are of opinion, that an user of the machine is actually proved in this case, the rule of damages should be the value of the use of such a machine, during the time of the illegal user. If the jury are of opinion, that a making of the machine only is proved, as there is no evidence in the case, to show any actual damages by the making, they ought to give nominal damages to the plaintiffs. For where the law has given a right, and a remedy for the violation of it, such violation of itself imports damage; and in the absence of all other evidence, the law presumes a nominal damage to the party.

As the song goes, "Everything old is new again"--the relevance of which to the law of patent damages I previously noted here.

Cotter on Noneconomic Damages in IP Law

My article Damages for Noneconomic Harm in Intellectual Property Law, 72 Hastings L.J. 1055-1120 (2021) is now officially out.  Here is a link to the article on ssrn, here is a link to the article on HLJ's website, and here is the abstract:

This Article provides a comprehensive analysis of awards of “noneconomic” damages for reputational and emotional harm in intellectual property (IP) law, including trademarks, copyright and moral rights, the right of publicity, and patent law. The Article discusses, among other matters, the Second Circuit’s recent decision in Castillo v. G&M Realty L.P., affirming a $6.75 million award of statutory damages for the infringement of artists’ moral rights in graffiti art; the European Union’s Intellectual Property Rights Enforcement Directive and its 2016 Liffers decision, which appear to require member states to award, where warranted, noneconomic (“moral prejudice”) damages across the full range of IP cases; and some recent arguments in favor of awarding damages for emotional harm in, even, patent infringement actions. Prompted by these and other developments, I argue that courts should recognize reputational harm as a potentially cognizable injury throughout all of the branches of IP law but that damages for emotional harm should be limited to right of publicity and moral rights matters. In addition, I discuss the various options for providing monetary relief in response to noneconomic harm, including awards of general damages, statutory damages, disgorgement of the infringer’s profits, and enhanced or punitive damages; and I conclude with a set of recommendations for crafting awards in a manner that would both vindicate the relevant, cognizable interests of plaintiffs while reducing the risks of arbitrary, uncertain, and potentially overdeterrent relief.

What Can Patent Damages Law Learn from Taylor Swift?

You might think that the answer to the question posed above is—with all due respect to the talented Ms. Swift—not much.  But a recent New York Times, titled Citing Taylor Swift, Supreme Court Seems Set to Back Nominal Damages Suits, did set me to thinking.  The article discusses the recent Supreme Court oral argument in Uzuegbunam v. Preczewski, a case that poses the question "[w]hether a government’s post-filing change of an unconstitutional policy moots nominal-damages claims that vindicate the government’s past, completed violation of a plaintiff’s constitutional right."  The matter arose after two students sued public college officials based on a college policy that impeded their ability to publicly speak on campus about their religious beliefs.  The students sought equitable relief and damages.  The college thereafter changed its policy, which led the district court and the Court of Appeals to conclude that the case was moot; but the students contended that they were entitled to nominal damages nonetheless.  I hadn't been following this case, but the Times article's description of oral argument poses some interesting questions about damages remedies generally.  Although Chief Justice Roberts appeared skeptical, suggesting that the plaintiff was seeking nothing more than a declaration that his rights were violated, the article notes that Justice Kagan “asked about 'the most famous nominal damages case I know of in recent times, which is the Taylor Swift sexual assault case.'  Ms. Swift, the pop superstar, sued a Denver radio host she said had groped her. She sought $1 in nominal damages. 'I’m not really interested in your money,' Justice Kagan said, describing Ms. Swift’s thinking. 'I just want a dollar, and that dollar is going to represent something both to me and to the world of women who have experienced what I’ve experienced.'"  Following up, Justice Barrett stated that "What Taylor Swift wanted was, you know, vindication of the moral right, the legal right, that sexual assault is reprehensible and wrong," and Justice Alito suggested that "nominal damages can serve an important goal, as when there is 'a real concrete violation that can’t be easily monetized.'"

I don't want to make a prediction about how this particular case will play out, but my understanding is that there are other lower court decisions in which courts have awarded nominal or emotional distress damages for violations of constitutional rights; and Justice Barrett's analogy to moral rights rang a bell for me, because (as I discuss in my forthcoming paper on noneconomic damages in intellectual property law) courts outside the United States frequently do award nominal damages for violations of authors' moral rights.   As I also discuss in that paper, citing work by among others Professor Mark Geistfeld, in deciding questions relating to damages for intangible harms such as emotional harm, pain and suffering, and the like, there are really two interrelated inquiries:  should these harms be cognizable under the body of law at issue, and if so how should one go about quantifying the resulting damages. 

In this regard, as far as patent law is concerned, I argue (contra an article published a couple of years ago by Professor Ronan Avraham) that courts shouldn't consider emotional harm to be a cognizable injury resulting from patent infringement.  But a question with, arguably, more real-world significance is whether there should be a damages remedy for patent infringement, if the evidence shows that the patented invention is no better than the next-best noninfringing alternative, or if the plaintiff simply fails to present any admissible evidence on damages.  Patent Act section 284 states, after all, that "[u]pon 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."  Last fall, however, the Federal Circuit in TecSec Inc. v. Adobe, Inc., 978 F.3d 1278 (Fed. Cir. 2020), rejected the argument that the statute "require[s] an award of damages greater than zero in all cases where the jury finds infringement," holding instead that if the plaintiff fails to prove any damages, it is not entitled to any damages.  (See my blog post here.)  On the other hand, in Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014), the Federal Circuit found fault with Judge Posner’s decision (Posner was sitting as trial court judge)  dismissing the action altogether, after deciding that (1) Apple wasn't entitled to an injunction, under eBay; (2) it hadn't presented admissible evidence on damages; and (3) it had no right to proceed to trial for nominal damages, which in Judge Posner's view would be, essentially, merely an advisory opinion.  As I wrote in an article discussing that case:

Section 284 of the U.S. Patent Act . . . states that “[u]pon 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” (emphasis added).  In Apple, Inc. v. Motorola, Inc., the Federal Circuit interpreted the italicized language to mean that, even when the patent owner fails to introduce admissible evidence quantifying the amount of its loss, the court still has an obligation to “determine what constitutes a reasonable royalty from the record evidence”⁷⁵—in effect, creating a rebuttable presumption that the patent owner is entitled to something as a consequence of the infringement.  The rule is consistent with practice in some other countries, but it provides no guidance on how to calculate the royalty due when the parties’ evidence is deficient.  One might imagine, though, that in such cases courts will have to take it upon themselves to apply methodology heuristics akin to those I discuss in a subsequent section below, based on whatever record evidence there may be concerning the amount of the use, comparable license rates, and the advantages of the technology over alternatives.  For now, however, this appears to be an area in which U.S. patent damages law remains largely underdeveloped.

^75/  . . .  Further:

 

. . . if the patentee’s proof is weak, the court is free to award a low, perhaps nominal, royalty, as long as that royalty is supported by the record . . . .

 

Thus, a fact finder may award no damages only when the record supports a zero royalty award. For example, in a case completely lacking any evidence on which to base a damages award, the record may well support a zero royalty award. Also, a record could demonstrate that, at the time of infringement, the defendant considered the patent valueless and the patentee would have accepted no payment for the defendant’s infringement. Of course, it seems unlikely that a willing licensor and willing licensee would agree to a zero royalty payment in a hypothetical negotiation, where both infringement and validity are assumed.

 

At summary judgment, as is the case here, a judge may only award a zero royalty for infringement if there is no genuine issue of material fact that zero is the only reasonable royalty. Thus, if a patentee raises a factual issue regarding whether it is due any non-zero royalty, summary judgment must be denied. In any event, simply because a patentee fails to show that its royalty estimate is correct does not, by itself, justify awarding a royalty of zero at summary judgment, as the district court did here . . . .

So, maybe the pending decision in Uzuegbunam will provide some guidance, at least by way of analogy, for cases in which (as in Apple) the patent owner is not entitled to an injunction, and (as in TecSec) it doesn’t provide sufficient evidence on damages either.  Is the whole matter moot, or is there some entitlement to vindicate the owner’s claim that its rights have been violated?  I’d be inclined to say that the patent owner’s case is moot, even if the college students’ case is not, either because a civil right (or, as in the Swift matter, the right to be free from sexual assault) is more fundamental than a patent right, or because emotional and other intangible harms should be cognizable in the former but not the latter.  Also, as the Times article points out, citing a comment made at oral argument by Justice Kavanagh, under the civil rights laws the students may be entitled to attorneys’ fees if they qualify as prevailing parties, so that could be an important consideration differentiating that type of case from the patent context.  (Now that I think of it, there may be some relevance as well for cases involving whether someone has standing to sue for data breaches--something I briefly mention in my noneconomic damages paper, citing an important paper on this topic by Daniel Solove and Danielle Citron.)  But maybe I’m wrong, and need to think about this some more.