Page 29 - Intellectual Property Disputes

Overview of Calculating Damages in Intellectual Property Disputes

The following chart summarizes the form of actual damages, defendant’s profits, and statutory damages
available for infringement of each type of intellectual property.

Patent fn 1 Trademark Copyright Trade
Secret fn 2
Utility Plant Design
Patent Patent Patent
Lost profits X X X X X X

Price erosion X X X X X X
Corrective X
advertising
Unjust enrichment X X X X
Reasonable royalty X X X X X X
Decrease in value X X X
Statutory fn 3 X X

Compensatory (Actual) Damages

The fundamental purpose of a civil damages remedy is to make the plaintiff whole for its legally
recognized and proven injuries or losses. fn 4 Compensatory actual damages for intellectual property
infringement or misappropriation are intended to compensate the plaintiff for actual losses proximately
caused by the illegal infringement. Examples of actual compensatory damages include lost profits
(profits lost on sales that would have been made but for the infringement), price erosion, corrective
advertising, or reasonable royalties (royalty income that the plaintiff would have earned had it entered
into an agreement to license the intellectual property in suit to the defendant), among other measures.

A decrease in value is also a form of actual damages in relation to non-patent intellectual property. The
market value measure is what courts most often refer to when they use the term general damages. fn 5
The market value measure determines the market value of the intellectual property "as is" and the
market value "as if it were not injured." The difference between these two values is the damage that the
defendant’s wrongful act inflicted on the intellectual property owner. The lost opportunity measure
quantifies the decrease in market value, or the impact on market value, that the intellectual property

fn 1 Statutory damages may be available for patent mismarking.

fn 2 Specifics depend on individual state law.

fn 3 Statutory damages for trademarks are only available in regard to trademark infringement involving counterfeiting.

fn 4 Dan Dobbs, Dobbs Law of Remedies: Damages—Equity Restitution, 2d ed. (1993), 281.

fn 5 Id., 288.

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