The $5.72 Billion Jury Award in Taction v. Apple

Readers probably have already heard that on Friday a jury awarded damages in the amount of $5.72 billion in Taction Technology, Inc. v. Apple Inc., No. 3:21-cv-00812-TWR-JLB (S.D. Cal.).  This case has been the subject of one previous Federal Circuit appeal, which resulted in a nonprecedential opinion in August 2025 vacating a summary judgment of noninfringement based in part on an erroneous claim construction.   As the Federal Circuit explained at that time, the patents in suit “share a common specification and relate ‘to tactile transducers that produce bass frequency vibrations for perception by touch,’ with each asserted claim “requir[ing] damping the moving portion’” of the apparatus.  Taction claimed that certain iPhones and Apple Watches with haptic (“the science of enabling interaction with technology through the sense of touch, including, for example, using vibrations”) technology infringed the patents in suit.  

Anyway, the case went to trial this month, and on Friday the jury found that Apple infringed claims 17 and 19 of U.S. Patent No. 10,659,844 and claim 16 of U.S. Patent No. 10,820,117; that Taction proved its damages to be $5,721,961,750; and that the infringement was not willful (so no risk of trebling, at least!).  This is the largest patent damages award in U.S. history—though as others have noted, stratospheric awards like this rarely survive intact, following post-trial motions and appellate review for possible substantive legal errors and/or errors specifically relating to damages calculation.   

I don’t know a great deal yet about the damages issues.  A quick review, however, of the parties’ trial briefs on damages (see here and here), the jury instructions, and a couple of pretrial evidentiary rulings reported on Westlaw (see 2026 WL 2608208 and 2026 WL 2325817) indicate, if I understand correctly, that Taction relied primarily on the “Corsair” license as a comparable, but that the district court excluded the royalty amount in the Corsair license, and the testimony of Taction's damages expert, for failure to adequately apportion the value attributable to the patents in suit in this case.  Taction's September 20 damages brief therefore instead relies on lay testimony that “the cost of ferrofluid required to implement the patented technology in the Corsair product was approximately 20 cents per unit,” and that this cost “is limited to implementing the patented technology and does not relate to the only other technology licensed,” so that "20 cents provides a minimum for a per unit reasonable royalty and, at the very least, provides a data point for the jury to consider in addition to the other evidence":  "[a] party would not pay 20 cents for just one component to implement the infringing technology unless the value that the technology provides exceeds that amount."  Apple counters that without a royalty amount from the Corsair license in evidence, or admissible evidence on how to apportion such a rate, there isn't enough here to justify anything more than nominal damages.  (Apple cites Rex Medical, L.P. v. Intuitive Surgical, Inc., 156 F.4^th 1289 (Fed. Cir. 2025), as precedent for an award of nominal damages, on the ground, contested by Taction, that that case involved “materially identical facts” including a failure to apportion.  For discussion of Rex on this blog, see here.)  Apple further argues that the testimony about the cost of ferrofluid doesn't overcome these problems, because "ferrofluid is not the claimed invention, and a contribution attributable to an unclaimed component is not an apportionment of the patents' value." 

Reports on Bloomberg, Law360, and ip fray provide some further background on the case, including that the plaintiff’s suit is funded by two related litigation financing entities. 

Update:  I should note that it is not immediately obvious to me how you get to $5.72 billion, even if you credit the plaintiff's argument about the cost of ferrofluid being a relevant reference point.  At 20 cents per unit, you'd have to sell over 28 billion units to get to $5.72 billion.  Apple surely sells a lot of iPhones and Apple Watches, but given earth's population of about 8.3 billion people, that would be about 3.44 products per person.  I suppose we will see what other evidence comes out post-trial and on appeal.  

Criminal Enforcement of Intellectual Property in Asia

I recently received a copy of a new edited volume, Criminal Enforcement of Intellectual Property in Asia:  Sources, Significance, and Side-Effects (Kung-Chung Liu & Tianxiang He eds., Oxford Univ. Press 2026).  The book consists of eighteen chapters, ten of which address criminal sanctions for IP infringement in selected Asian jurisdictions (China, Hong Kong, India, Japan, Malaysia, Korea, Singapore, Taiwan, Thailand, and Vietnam).  In addition to an introductory chapter by Roland Moerland, there also are chapters on criminal punishment under the international treaties, on AI, and on comparison and reform, along with chapters on the U.S., the U.K., the E.U., and Germany.  This should be an excellent source for researchers who are interested in comparative IP remedies.  In my recent book Remedies in Intellectual Property Law (Edward Elgar Publishing 2026), I drew on a earlier paper coauthored by some of the same authors represented here (Masabumi Suzuki et al., Civil Follow Criminal or Criminal Follow Civil Procedure as Models to Deal with IP Infringement: Asian vis-à-vis Western Approaches, in Kreation Innovation Märkte – Creation Innovation Markets: Festschrift Reto M. Hilty 663 (Florent Thouvenin et al. eds., Springer 2024), previously noted on this blog here), but I surely would have benefited from this more detailed volume (and plan to cite it if I do a second edition!). 

 

Here is the abstract of the book:

IP scholars are not familiar with criminal law and nor are criminal law scholars familiar with IP law. This edited volume delves into this no man’s land. It identifies and addresses one aspect of IP laws and regimes in Asia that has been long overlooked but is shaping or even distorting the IP landscape in Asia, namely the actual use and/or overuse of criminal punishment for protecting IP rights. This is in stark contrast to leading Western jurisdictions, whose criminal punishment of IP infringement is provided for but rarely enforced. The overarching theme of this book is to critically review the rationale, legitimacy, and effectiveness of criminalizing IP infringement, assess its significance, expose its side effects, and propose reform suggestions. It has five parts. It starts with a criminological discussion of IP crimes, followed by five chapters that study the sources and models of criminal punishment of IP infringement, namely international treaties, the US, UK, Germany, and the EU. Part III then surveys six major civil law Asian jurisdictions—Japan, Taiwan, Korea, China, Thailand, and Vietnam. Part IV research four major common law Asian jurisdictions—India, Malaysia, Hong Kong, and Singapore. The sequence of Parts III and IV follows the order of seniority in introducing criminal punishment for IP infringement and is based on a common structure. The last part of the book provides policy analysis by first rethinking the criminal sanctions against the background of generative AI and the evolution of IP, followed by a comparative study and reform suggestions for IP leading jurisdictions, Asian jurisdictions, and the WTO community.

I have seen one review so far, by Niharika Salar on IPKat, here.

Abuse of Economic Dependence

As I discuss at pages 199-204 of my book Wrongful Patent Assertion:  A Comparative Law and Economics Analysis (Oxford Univ. Press 2026), several countries, though not the United States, recognize an “abuse of economic dependence” doctrine.  In general terms, the doctrine forbids a firm with relative strength in comparison with another from abusing that strength.  Exactly what that means, of course, may vary from one country to another; but where applicable the doctrine can result in liability under circumstances in which the defendant lacks sufficient market power to be liable for abuse of dominant position.  At least in some countries, moreover, the doctrine is (or as originally conceived was) specifically intended to protect small and medium-sized enterprises, analogous in some ways to the Robinson-Patman Act in the U.S.  But can the doctrine be employed in response to (alleged) abuses of patent rights?

In this regard, I devote several pages to a recent decision of Belgium’s Cour de cassation, Victrix Socsan S.L. v. Tunstall Group Holdings Ltd., which I also have discussed on this blog at various times as it made its way from trial court to appellate court to Cour de cassation (see here, here, and here).  I was therefore pleased to see an English-language translation of portions of the decision by David Wright-Policepayeh in the current issue of GRUR Int. (specifically, 75 GRUR Int. 781-83 (2026)).  The translation highlights the portion of the decision holding that an abuse of economic dependence claim can be asserted even in the absence of a contractual relationship between the claimant and the defendant.  My own take, as expressed in the book, is that the lower court’s narrower interpretation (requiring a contractual relationship) is more sensible than the more expansive interpretation adopted by the Cour de cassation, which (I argue) “may threaten to provide every disappointed business suitor with a potential cause of action” (p.204).  In contrast, “where there is a contractual relationship, the abuse of economic dependence doctrine arguably could fill a gap by discouraging “holdup” in the sense originally developed by Oliver Williamson and others—as a form of opportunism on the part of the dominant party in a contractual relationship, the ex ante possibility of which could discourage some non-dominant undertakings from proceeding with otherwise beneficial transactions, or induce parties to incur inefficient ex ante costs to prevent such opportunism”—though the efficacy of the doctrine in this regard would hinge on the courts’ ability to apply the doctrine in a manner that would maximize social benefits over unintended social costs.

Whether the Belgian decision will lead to more cases, in Belgium or elsewhere, in which claimants assert the doctrine in response to alleged abuses of patent rights remains to be seen.  Meanwhile, for readers who want to learn more about the doctrine but don’t read French, the GRUR-Int. translation should be helpful—as is, I hope, my discussion in Wrongful Patent Assertion.  (And, just a reminder:  you can download the first chapter of the book for free using this link, through the end of this month; and you can use the promotion code AUFLY30 for a 30% discount). 

Helmers and Love on Injunctions and Venture Capital

Christian Helmers and Brian Love have posted a paper on ssrn titled Injunctions and Venture Capital: An Empirical Look at eBay's Effect on Startups, 16 NYU J. Intell. Prop. & Enter. L. __ (forthcoming 2027).  Here is a link to the paper, and here is the abstract:

In the two decades that have passed since the Supreme Court raised the bar for awarding injunctive relief in eBay v. MercExchange, numerous descriptive studies have documented a corresponding reduction in the frequency with which patent enforcers obtain injunctions against ongoing infringement. However, surprisingly few attempts have been made to assess whether eBay had a broader effect on incentives to innovate. As a result, it remains controversial whether eBay advances patent law's fundamental goal of spurring invention--and thus should be preserved--or instead stands in the way of progress--and thus should be reversed or legislatively abrogated. We inform this active policy debate by presenting the results of an empirical analysis of eBay's effect on venture-backed startups, a segment of the innovation economy that is generally regarded as both disproportionately affected by patent protection at the margin and disproportionately responsible for economic growth and job creation. Our results suggest that eBay had a modest and mixed effect on startup performance, not the broadly negative effect predicted by critics of the decision. This is true even among medical technology startups, a group that theory predicts is especially susceptible to eBay's hypothesized harms.

This is an important paper that deserves attention from policymakers.  It adds to the empirical literature evaluating the effect of eBay (in particular, papers by Mezzanotti & Simcoe, Mezzanotti, and Bereskin, Hsu & Wang, previously cited on this blog here) by focusing specifically on venture-backed startups founded between 2002 and 2005, information on which the authors obtained from PitchBook (see pp. 21-22).  Helmers and Love summarize their findings as follows:  

. . . our analysis indicates that the eBay decision had, at most, a modest, mixed effect on startups. What our results primarily suggest is that medtech and IT startups performed no differently than startups in all other areas. We find no evidence that the eBay decision was associated with an increase in shutdowns or down rounds, a reduction in firms’ likelihood of raising an additional round of VC funding, or changes in the quarterly frequency of VC investments. In addition, when we focus on the set of startups that was likely most impacted by eBay—those that filed patent applications prior to the decision—we likewise find no evidence that startups in either set of impacted industries were relatively less likely to progress to late-stage VC funding, more likely to resort to unpriced fundraising deals, or slower to close funding rounds; nor do we find that they grew at relatively slower rates as measured by headcount or the size of the VC deals they completed.

Moreover, when our specifications do produce statistically significant results, those results are mixed. In the medtech industry, our results suggest that startups grew relatively rapidly in the years following eBay as measured by the size of the deals they closed (in the overall sample) and the valuations reflected in those deals (in the overall and patenting samples) and, in addition, were generally more likely than startups in control industries to progress to a Series C funding round. At the same time, our results also suggest that patenting medtech startups were relatively less likely to obtain an initial round of VC funding post-eBay. Similarly, in the software and IT industries, our results indicate that startups grew relatively rapidly in terms of deal size and valuation overall, yet were also less likely to obtain an initial VC investment following eBay in both the overall and patenting samples (p.39).

One possible conclusion to draw, among others, is that "the association between patenting and startup performance may not be driven by the potential enforceability of . . .  patents, but rather . . . their value as signals" (p.41).  

Suzuki on SEP Disputes in Japan

Masabumi Suzuki has posted a paper on ssrn titled Standard Essential Patent Disputes in Japan:  From Apple v. Samsung to Pantech and the Future of SEP Dispute Resolution.  Here is a link to the paper, and here is the abstract:

After more than a decade of silence following the 2014 IP High Court Grand Panel decisions, Japanese courts issued three SEP judgments in 2025, all arising from suits by Pantech. This paper analyzes the Tokyo District Court's Pantech v. Google I — Japan's first case where an injunction was granted on an SEP — arguing its abuse-of-rights reasoning is unpersuasive: it offers no normative standard for good-faith FRAND negotiation, and barely evaluates the patentee's own conduct, unlike the more balanced Osaka judgment in Pantech v. Google II. It also covers Pantech v. ASUS JAPAN's FRAND royalty calculation. The paper then examines the Tokyo District Court's 2026 "Procedures" that push early settlement on global FRAND terms in litigation and initiate a judicial mediation system. It concludes that while this pragmatic turn suits SEPs' inherently global nature, more predictability about Japanese courts' position on FRAND negotiation is needed for Japan to become an attractive forum for SEP disputes.

This is an essential paper, if you want to understand the recent district court decisions in Tokyo and Osaka concerning SEPs—what they say, how they compare to the 2014 Apple v. Samsung decisions, what the possible weak spots are in the courts’ analyses, and what questions remain open—as well as how court-supervised settlement negotiations enter into the mix.

For previous discussion on this blog of the recent decisions discussed in Professor Suzuki's article, see here and here. 

Federal Circuit Leaves Untouched Its Unjust Enrichment Holding in Versata v. Ford

Last May, I published a post on Versata Software, LLC v. Ford Motor Co., a case in which a panel of the Federal Circuit held that, under the federal Defend Trade Secrets Act (DTSA) and the Michigan Uniform Trade Secrets Act, a plaintiff is entitled to recover “unjust enrichment” damages as a matter of statutory right.  The panel issued a modified opinion today, though only in respect of correcting its previous statement that Ford did not “claim” that certain costs should have been deducted from the breach of contract damages the plaintiff also sought (see p.15).  The holdings with regard to trade secret law therefore remain intact, in particular the panel’s conclusion that unjust enrichment is a remedy available at the plaintiff’s option (a position that, as noted in my previous post, some other courts have endorsed, while others have rejected it); and that an unjust enrichment award can exceed the royalty the parties would have negotiated, based on their licensing history.  (Compare this with the outcome of the recent Lucent v. Astronics case in the U.K., as discussed here.)  For now, I remain somewhat skeptical that disgorgement of profits or avoided costs should be available as a matter of course in trade secret litigation, but I am still thinking through the issues in anticipation of writing a paper on trade secret remedies sometime next year.  I'll just note, as I did in May, that U.S. courts are somewhat divided on the relevant issues, and that approaches to unjust enrichment outside the U.S. also reflect a range of perspectives.

Lufthansa v. Astronics: Disgorgement of Profits, Part 3

This final installment of posts  on the Court of Appeals for England and Wales’ decision in Lufthansa Technik AG v. Astronics Advanced Electronic Systems, [2026] EWCA Civ 964, will discuss Lord Justice Arnold’s analysis of the correct method of apportionment, the double recovery issue, and interest, and the two short concurring opinions by Lord Justices Nugee and Lewison.  Familiarity with the first two posts (here and here) in the series is assumed.

On the issue of apportionment, the question is how to estimate the benefit that accrued to the defendants from their use of the patented invention.  Here, the defendants “had pleaded four alternative ways of apportioning their profits: (i) patent counting, (ii) the cost of the Components, (iii) the causative effects of the Patent and other factors and (iv) by reference to the 2014 Teaming Agreement [between Lufthansa and KID Systeme, a division of Airbus],” but “their primary case in closing submissions was based on the 2014 Teaming Agreement” (para. 71).  The trial judge therefore "used a royalty rate derived from the 2014 Teaming Agreement between Lufthansa and KID to determine the appropriate percentage of Astronics’ profits which were attributable to the Patent. He then applied the same percentage to Panasonic’s profits” (para. 194); further, “the judge had no alternative to the licence-based method of apportionment, because he had rejected the principal alternative method advanced by the Defendants at trial (patent counting) on procedural grounds and Lufthansa did not put forward any other method of apportionment” (para. 196).  Lufthansa argues, however, that a license typically allocates the expected benefit from the use of the invention between the licensor and the licensee, whereas the disgorgement remedy should entitle the patentee to 100% of the benefit accruing to the defendant from the use of the invention.  In response, Lord Justice Arnold writes that “the fact that a licence typically involves 25-50% of the expected overall economic benefits being received by the licensor is not inconsistent with using the royalty payable as a guide to the relative importance of the patent compared to other factors which contribute to the total profits generated by the licensee, particularly in the absence of any better guide” (para. 200); but while Lufthansa might have been entitled to some sort of “uplift to the royalty derived from the 2014 Teaming Agreement,” “the short answer to this is that Lufthansa did not invite the judge to apply any such uplift at trial,” and “[i]t is too late for Lufthansa to do so now” (paras. 198, 201). 

There are additional arguments Lufthansa makes against the trial court’s use of the implied royalty (which it calculated at 13% of net profits), but the court rejects these in fairly brief fashion (paras. 202-09), and I won’t belabor the details here.  There is one issue, however, with regard to which the Court of Appeal sides with the defendants, specifically the profits to be awarded on Astronics’ and Panasonic’s supply of “components for assembly by installers (such as Lufthansa’s competitors) or by seat manufacturers (such as Safran)" (para. 210).  Astronics and Panasonic’s argument is the following (para. 211):

i) KID was, pursuant to the 1998 Teaming Agreement, Lufthansa’s exclusive licensee under the Patent within the meaning of the 1977 Act in respect of at least the acts which Astronics and Panasonic carried out in infringement of the Patent i.e. the supply of components. This depends on whether the 1998 Teaming Agreement was an exclusive licence, as Astronics and Panasonic contend, or a sole licence, as Lufthansa contends (“the Construction Issue”).

 

ii) As outlined above, KID subsequently asserted a claim for infringement against Astronics’ predecessor, GD [General Dynamics], on the basis that it had a “right of exclusive use”. However, it compromised that claim for good and valuable consideration (a cross-licence) in the 2003 Settlement Agreement. That compromise included KID’s right to claim profits derived from infringement from Astronics and its customers (“the Compromise Point”).

 

iii) Astronics and Panasonic have the benefit of that compromise because it passed to Astronics and its customers when Astronics bought AES pursuant to the 2005 Asset Purchase Agreement (“the Succession of Benefit Issue”).

 

iv) The profits which Lufthansa is entitled to do not include the profits due to KID that were the subject of the compromise. Lufthansa’s claim to profits must therefore be reduced to account for KID’s (compromised) share of the profits (“the Single Pot of Profits Issue”).

 

v) That apportionment should be achieved by allocating to KID 50% of Astronics’ and Panasonics’ profits that were derived from the infringement, for the duration of the 1998 Teaming Agreement (i.e. until 31 December 2014), and reducing the sums payable to Lufthansa accordingly (“the KID Allocation Issue”).

The judge further notes that "the logic of Astronics’ and Panasonic’s argument is that Lufthansa’s profits should be reduced by 100% of the relevant profits. Nevertheless Astronics and Panasonic offered, if successful on the other two issues, to accept 50%. During the course of argument Lufthansa accepted that offer" (para. 213).  So the question then is whether, applying German contract law principles to interpret the 2003 Settlement Agreement, English law would consider the license Lufthansa granted KID under the 1998 Teaming Agreement to be an exclusive license; and if so, whether English law would therefore preclude Lufthansa from claiming any share of the profit that GD’s successors in interest were obligated to turn over the KID under the 2003 Settlement Agreement through December 31, 2014.  There follows a detailed discussion of the relevant legal principles, at the conclusion of which Lord Justice Arnold finds, contrary to the trial court, that the license was exclusive.  The question then “is what happens if a patent subject to an exclusive licence is infringed, and the exclusive licensee compromises its claim against the infringer. Can the patentee nevertheless claim all of the profits made by the infringer? Lufthansa contends that the answer to this question is yes, while Astronics and Panasonic contend that the answer is no. It is common ground that there is no authority which addresses this question. The answer to it depends on the proper interpretation of the statutory provisions” (para. 251).  To cut to the chase, Lord Justice Arnold determines that

Although the patentee and an exclusive licensee may each sustain different losses due to an infringement, which they can each recover as damages, there is only one pot of profits derived by the infringer from the infringement. It cannot be right for both the patentee and the exclusive licensee to have an equal claim to that pot of profits . . . .

 

The answer to this conundrum is in my judgment provided by the concluding words of [Patents Act] section 67(2): “the profits derived from the infringement, so far as it constitutes an infringement of the rights of the exclusive licensee as such”. To the extent that the rights conferred by the patent are subject to an exclusive licence, the exclusive licensee stands in the shoes of the patentee. To that extent, it is therefore the exclusive licensee which is entitled to the profits to the exclusion of the patentee. If the exclusive licence covers a sub-set of the rights conferred by the patent, then outside the scope of exclusive licence the patentee remains entitled to the profits. In such cases the patentee and the exclusive licensee are each entitled to a share of the profits. Thus it may be necessary to apportion the profits as between the patentee and the exclusive licensee after one has apportioned the total profits between those derived from the infringement and those derived from other factors.

 

This approach is in my view supported by the fact that an account of profits is an equitable remedy. A court of equity would surely take into consideration the rights of both the patentee and the exclusive licensee, and would not allow the patentee to scoop all of the profits derived from the infringement (paras. 256-58).

This issue, then, is resolved in favor of Astronics and Panasonic, who will be entitled to an appropriate reduction in the profits awarded.

The final two topics addressed by Lord Justice Arnold are double recovery and interest.  As noted in one of my earlier posts, there is still ongoing litigation between these parties in France and Germany, and this causes the defendants to be concerned about the prospect of double recovery.  Although Lufthansa “accepts that it is not entitled to double recovery in France or Germany where an award of the same profits has already been made in these proceedings in respect of the same physical products” (para. 264), the defendants want a recital in the final order to the effect that “the sums . . . found due in the Main Judgment were ‘provisional pending the final resolution of the Account involving the parties in France and Germany’. The purpose of this is to enable the Defendants to ask the English court to reduce the award of profits to Lufthansa in the event that the French or German courts award Lufthansa sums which the Defendants consider involve double recovery” (para. 265).  The trial court, expressing doubt over whether it had jurisdiction to make such an order, concluded that even if it did it would exercise its discretion not to do so here, because (among other things) “this should be a matter for [the French or German Courts] and not by the English Courts” (para.266).  The Court of Appeal agrees:

It is up to those courts to decide whether, and if so to what extent, Lufthansa’s claims involve double recovery, and if they do involve double recovery, what to do about it. It is not the function of the English courts to mark the homework of the French and German courts once they have undertaken that exercise. That would be a gross breach of comity (para. 268).

As for interest, Astronics and Panasonic argued that the High Court lacks authority “to award pre-judgment interest prior to the date on which the patentee elects for an account of profits . . . either in equity or pursuant to section 35A(1) of the Senior Courts Act 1981” (para. 270).  The court rejects these arguments, and makes the persuasive point that “the time value of money is just as relevant to an account of profits as to an award of damages” (para. 274).  Astronics and Panasonic also contest the judge’s decision to award interest by reference to the U.S. Prime Rate (specifically, Prime + 2%), as opposed to the Euribor rate; but the court rejects this argument as well, stating that  

 

As Lufthansa points out, Astronics’ and Panasonic’s approach involves converting the judge’s awards of profits, which were in US$, into euros using a conversion factor derived by averaging the exchange rate between US$ and euros over the period when each relevant sum of profits was made, then applying a Euribor-based rate of interest to the resulting euro sums and then converting the resulting amounts of interest into US$ using a conversion factor based on the exchange rate at the end of the period over which interest was to be awarded.

 

As Lufthansa submits, this approach is contrary to the principle that it is no part of the court’s function to allow for exchange rate fluctuations between the date as at which monetary awards are assessed and the date of judgment (paras. 307-08).

That concludes Lord Justice Arnold’s opinion, in which Lord Justices Nugee and Lewison concur.  Lord Justice Nugee writes one paragraph stating his “inclination” to interpret Patents Act section 67(1) (discussed in paragraph 259 of Lord Justice Arnold’s opinion) as referring to proceedings brought only by an exclusive licensee, but notes that “it is not necessary to resolve this point for the purposes of these appeal” (para. 312).  Lord Justice Lewison adds a longer concurring opinion focusing on accounts of profits, which takes a somewhat more negative view of the utility of the noninfringing alternative concept in awarding profits.  He writes that "In a simple case there may be no need to investigate a counterfactual non-infringing alternative. Suppose that the patent in suit is a patent for an inventive widget. The infringer makes widgets falling within the claims of the patent and sells them. In such a case, the court need do no more than assess what profit the infringer made from the sale of the widgets and order him to pay that amount to the patentee" (para. 320).  For reasons I’ve been discussing now for many years, I do not find this perspective to be persuasive--though as I noted in my previous post, I agree with the Lufthansa court to the extent that administrative costs often may counsel in favor of applying an apportionment analysis instead of the differential profits approach to calculating the profits attributable to the infringement.  Lord Justice Lewison then provides a short discussion of the Canadian Nova v. Dow decision, in which however he expresses his general agreement with Canadian Supreme Court Justice Rowe’s analysis (paras. 321-27), in particular Justice Rowe’s rejection of the argument that Nova should have been able to deduct the profits it would have made from selling “an entirely different kind of plastic.”  As indicated in my previous post, I concur in Professor Siebrasse’s view that the Canadian Court got this issue wrong.  Lord Justice Lewison’s opinion concludes with a discussion of the Australian Dart Industries case and other English decisions.  Toward the very end he adds this paragraph:

In relation to the apportionment exercise he noted that in some previous cases (Hotel Cipriani and Jack Wills Ltd v House of Fraser (Stores) Ltd [2016] EWHC 626 (Ch)) profits had been apportioned on the basis of a notional royalty, calculated by reference to actual royalties charged in the market. That was also one of the methods canvassed by Leggatt J in Marathon Asset Management Ltd v Seddon in a case where there was no non-infringing alternative. He decided that it was appropriate to use that method of apportionment. In so deciding, the judge accepted the evidence of Mr Bezant, the expert called by the Defendants, to the effect that the use of a royalty was a way of sharing the profit between the contribution made by the patent and the contribution made by other factors to the success of the Defendants’ products.

 

Mr Hall argued that the use of the licence was wrong in principle. A licence is designed to share profit between the right holder and the licensee, whereas the object of an account of profit is to transfer the whole of the profit from the infringer to the right holder. Although that argument was attractively put, it contains an unarticulated premise which, in my view, is wrong. The premise is that the share of profit for which a licence provides is a share of the profit derived from the right. But that is not (or at least not necessarily) so. The pool of profits which must be shared between licensor and licensee may be (and often is) the overall profit of the complex product into which the patented article is incorporated. If so, then the share of the overall profit for which the licence provides may well be the entirety of the overall profit attributable to the patented article (paras. 348-49).     

Lord Justice Lewison is of course correct that “[t]he pool of profits which must be shared between licensor and licensee may be (and often is) the overall profit of the complex product into which the patented article is incorporated”; and I can't disagree that “the share of the overall profit for which the licence provides may . . . be the entirety of the overall profit attributable to the patented article” (emphasis added).  But I nevertheless find Mr. Hall’s analysis more persuasive, as an economic matter:  a licensee with any measure of bargaining power is unlikely to agree to agree to pay 100% of the benefit it expects to derive from the use of the licensor’s patent.  Still and all, if it turns out that the English courts downplay the use of NIAs in calculating infringers’ profits but also rely heavily on notional royalty rates for apportionment, the end result may be tolerable—though one might be forgiven for asking whether the disgorgement remedy really needs to exist at all, if the end result is going to be the functional equivalent of a reasonable royalty.