Page 31 - Intellectual Property Disputes

terms as the court deems reasonable . . . " fn 10 Similarly, the DTSA and UTSA expressly provide that, in
addition to recovering its actual loss, a trade secret owner may recover the "unjust enrichment" caused
by the misappropriation to the extent the enrichment is not taken into account in calculating the owner’s
actual loss. fn 11

Notably, the Copyright Act, the Lanham Act, and the DTSA and UTSA each provide that the
intellectual property owner shall recover only the net profits of the infringer that are attributable to the
infringement. This constraint requires an expert attempting to quantify an appropriate unjust enrichment
award to determine (a) the infringer’s revenues and costs associated with the infringement and (b) what
portion of the net profits are attributable to the infringement (commonly referred to as the apportionment
problem). These issues often present significant analytical challenges to the expert. fn 12

Prejudgment Interest

Prejudgment interest may be awarded in addition to other damages. fn 13 In Allen Archery, Inc. v.
Browning Manufacturing Co., fn 14 the Federal Circuit explained that an award of prejudgment interest is
necessary to place the patent owner in the same position it would have been in but for the infringement.
If the court awards prejudgment interest, that interest ordinarily accrues from the date that damages
began.

However, that is not the case for trademarks. The Lanham Act provides that "[t]he court in its discretion
may award prejudgment interest on relief recovered under this paragraph, at an annual interest rate
established under Section 6621(a)(2) of Title 26, commencing on the date of service of the claimant’s
pleading setting forth the claim under this paragraph and ending on the date such recovery is granted, or
for such shorter time as the court deems appropriate." fn 15 The court has discretion in selecting an
appropriate prejudgment interest rate in each dispute but will typically select either the prime interest
rate or short-term Treasury rate. The expert should consult with client legal counsel to determine
prejudgment interest rates and compounding methods to be used, if applicable.

The Infringement Damage Calculation

In general, if "the record permits the determination of actual damages, namely, the profits the patentee
lost from the infringement, that determination accurately measures the patentee’s loss. If actual damages
cannot be ascertained, then a reasonable royalty must be determined." fn 16 The expert will ordinarily
make certain preliminary findings before determining the most appropriate measure of infringement
damages. One such finding is the dollar amount of sales. The units sold and incremental profits will also

fn 10 15 USC 1125(c)(1).

fn 11 Section 3(a) of the Uniform Trade Secrets Act (USTA) with 1985 Amendments; 18 USC 1836(b)(3)(B).

fn 12 The fact that the burden is on the infringer to prove the expenses that should be deductible from gross revenues to derive net
profits somewhat eases the expert’s apportionment challenge. See the section, "Apportionment," in this practice aid.

fn 13 See, for example, 35 USC 284.

fn 14 Allen Archery, Inc. v. Browning Mfg. Co., 898 F.2d 787 (Fed. Cir. 1990).

fn 15 15 USC 1116(d)(11).

fn 16 Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075 (Fed. Cir. 1983).

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