Enhanced Damages for Patent Infringement: A Normative Approach

Innovation and Economic Growth, Intellectual Property and Patents

Article Snapshot

Author(s)

Keith Hylton

Source

The Review of Litigation, (forthcoming); Boston Univ. School of Law, Law and Economics Research Paper No. 16-31, 2016

Summary

The Unites States Supreme Court gives the lower courts discretion to enhance damages for patent infringement. Because of the importance of encouraging innovation, patent damages are often tripled to deter infringement.

Policy Relevance

In some cases, courts should not enhance patent damages. In other cases, damages should increase by a factor of three, four, or even more.

Main Points

  • In Halo Electronics v. Pulse Electronics, the United States Supreme Court gave lower courts greater discretion to award enhanced damages for patent infringement.
     
  • To encourage expensive investments in innovation, intellectual property damages should be two or three times greater than the amount needed simply to compensate the patent holder for its own losses.
     
  • Current law allows patent damages to be tripled, but there is no reason to assume that treble damages are always optimal; if there is no evidence of reprehensible conduct by an infringer, the court should award only compensatory damages, with no multiplier.
     
  • The first factor to consider in setting patent damages is the social value of the innovation, which can be greater than the value of the patent to the patent owner.
     
  • If the infringer would profit from infringement even after paying triple damages, the court should increase the damages award enough to eliminate the infringer’s profit.
     
  • When the identity of the patent infringer is hard to discover (for example, if the infringing part is buried deep in a complex product), the court should increase the patent damages by a factor greater than three to deter future infringement.
     
  • If the social value of a patent is more than three times greater than the private value of the patent, courts should multiple the damages award by a factor greater than three; for example, because a liver transplant costs more than six times as much as an effective hepatitis drug, damages for infringing the hepatitis drug patent should be multiplied by six.
     

Get The Article

Find the full article online

Search for Full Article

Share