Lost Profits in the United States
In Patent Damages: Contents
This section covers the following:
- Introduction to lost profits
- Types of recoverable lost profits (see below)
- Types of recoverable lost profits—Quick summary
- Summary of the basic elements of lost profits and burdens of proof
- Economic principles and factors afecting lost profits awards (see below)
- Proving entitlement to lost profits damages (see below)
- Standards for proving lost profits damages (see below)
- The Panduit standard
- Standards for proving lost profits damages (see below)
- Special case of future lost profits damages (see below)
- Infringer’s profits in design patent cases
Proving entitlement to lost profits damages includes:
- Causation and the “but for” standard
- Lost profits on sales of unpatented products by the patent owner
- Establishing causation
Types of recoverable lost profits
This section covers the following:
- Lost or diverted sales
- Price erosion damages
- Damages for unpatented items, aka convoyed (or collateral) sales
- Projected (future) lost profits
- Injury to reputation and goodwill
- Changes in business valuation: patent owner and infringer
Standards for proving lost profits damages—Critique and modications of the Panduit standard
This section covers the following:
- Technical substitutes vs. economic substitutes
- Market share evaluations
- Modications of the Panduit standard
- Two-supplier market theory
- Inclusion of unpatented items in the damage award (see below)
The Inclusion of unpatented items in the damage award includes:
- Overview of the entire market value rule
- Multifaceted machine that incorporates a patented feature
- Patented products sold with unpatented items: convoyed sales
- Spare parts
- Expansion of liability for unpatented devices and spare parts
Economic principles and factors afecting lost profits awards
This section covers the Origin of economics in patent damages and the Economic factors to consider in determining lost profits awards.
The Economic factors to consider in determining lost profits awards are the following:
- Cost causality
- Incremental profits
- Elasticity of demand for the patented product
- Strength of a patent as it aects demand
- Market conditions and future damages
- Determining elasticity of demand (see below)
Determining elasticity of demand includes:
- Elasticity and strength of a patent
- Price vs. total consumer expense budget
- Types of products
Standards for proving lost profits damages, including the Panduit standard
This section covers the following:
- Proving causation under Panduit
- Demand for the patent product (see below)
- Absence of acceptable noninfringing substitutes (see below)
- Patent owner’s capacity to meet demand
- Proving the amount of lost profits (see below)
- Testimony of economic experts
- Evidence to substantiate the patent owner’s lost profits theories: lost sales, price erosion, and future lost profits
- Evidence presented by the infringer (including Proving price erosion and Foreign sales)
Demand for the patent product includes:
- Market expansion defense to demand
- “Submarket” defense to the demand element
- Infringer’s name and reputation as a defense to demand
Absence of acceptable noninfringing substitutes
This section covers:
- Federal Circuit interpretations
- Denition of a “legally acceptable” substitute
- Price of alleged noninfringing substitutes
- Efect of the infringer’s conduct on the substitutes issue
- Efect of market inuences on the substitutes issue
- Efect of prior settlements on multiple infringers
- Timing of availability of the alleged substitute
- Patent owner’s products as substitutes
- Market share evaluations
- Yarway’s mini-market approach
Proving the amount of lost profits
This section covers:
- Incremental prot methodology
- Evidence and calculations to prove lost profits
- Discovery of evidence to prove lost profits
Special case of future lost profits damages
This section covers the following:
- Various theories for future lost profits (see below)
- Raising the evidentiary threshold for future lost profits
- Mandating consideration of market forces and economic principles
The Various theories for future lost profits include:
- Future lost sales
- Future price erosion damages
- Accelerated reentry damages
- Noncompetitive markets: contractual obligations (including Future lost sales due to infringer’s contractual arrangements and Price erosion)
- Injury to reputation and goodwill
Lost Profits Resulting from Tortious Injury to Business
This section discusses generally the subject of Lost Profits Resulting from Tortious Injury to Business, how to determine the facts essential to Lost Profits Resulting from Tortious Injury to Business, and, to some extent, how to prove it in litigation and defense. Related topics are also addressed.