Page 47 - Intellectual Property Disputes

property owner and the infringer were actual or potential competitors; otherwise, the infringement is
unlikely to have caused the intellectual property owner to lose sales.

The application of the concept of lost profits is similar in copyright, trademark, and trade secret cases as
discussed for patents elsewhere in this aid, except that the individual circuits, rather than the Federal
Circuit, hears federal appeals, which has led to more variation among rulings. The practitioner should
work with counsel to determine the appropriate legal guidelines for the relevant jurisdiction.

Revenues in Lost Profits Calculations

Measuring Revenues

The beginning point in the estimation of lost profits is the measurement of lost revenues. The primary
question to be answered is what additional revenues would have been generated by the plaintiff but for
the actions of the defendant? That is, if the infringing sales had not occurred, what would the purchasers
have purchased from the plaintiff and at what price?

The following issues are relevant to measuring the revenue on lost sales:

• What is the appropriate period of damages?

• Are lost profits recoverable for the entire apparatus in which the infringing sale is included or
only for the feature covered by the intellectual property in suit?

• How is the number of units of the infringing product to be determined?

• Can lost profits be recovered for products and services not covered by the intellectual property in
suit?

• Did the infringer cause an effect on the price that the intellectual property holder could have
charged but for the infringer’s actions?

These issues are discussed in the following sections.

Damage Period

The damage period may begin at the onset of infringement of existing intellectual property. In the case
of patent disputes in which the patent owner’s products are marked as patented, the damage period
begins when the infringing product is made, sold, imported, or offered for sale. fn 65 Conversely, if the
patent owner’s products are not marked as patented, the damage period begins only when the infringer
receives actual notice of infringement and has made, sold, imported, or offered for sale an infringing
product.

The damage period typically ends on the date of trial. In the case of patents, damages may also end upon
patent expiration if the patent expires before trial. However, subsequent to trial, a patent owner may seek
compensation for an infringer’s impact on the patent owner’s prospective sales if that impact emanates
from the market effect of the infringer’s past infringement. (This issue is particularly relevant to a price
erosion claim, which is discussed in the section, "Measuring Incremental Costs," in this chapter.)

fn 65 35 USC 287.

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