Abstract

The development of more accurate methodologies for calculating reasonable royalties in patent litigation has been the focus of intense interest in patent reform circles over the past decade. This article argues that a rational system for awarding reasonable royalties for patent infringement would be premised on four related principles: (1) that in awarding retrospective damages (damages for past acts of infringement) courts should take the scope of substantive patent law as fixed; (2) that the baseline damages recovery for prevailing patent owners should be the amount that restores them to the position they would have enjoyed, but for the infringement; (3) that courts should depart from this baseline when doing so is necessary to attain optimal deterrence; and (4) that, in attempting to replicate the license the parties would have negotiated ex ante but for the infringement, subject to some exceptions courts should authorize the consideration of factors that the parties realistically would have used, and should exclude consideration of certain other factors that lack a sound basis.