Page 91 - Intellectual Property Disputes

preclude another jury’s evaluation of reasonable royalty damages for infringing sales of Versaport II at a
different time in Applied II." fn 116

In 2014, the Federal Circuit again addressed the issue of anticipated results at the time of the
hypothetical negotiation versus actual results after the hypothetical negotiation. In Aqua Shield v. Inter
Pool Cover Team, the court noted the following:

What an infringer’s profits actually turned out to have been during the infringement period may
be relevant, but only in an indirect and limited way – as some evidence bearing on a directly
relevant inquiry into anticipated profits...In hypothetical negotiation terms, the core economic
question is what the infringer, in a hypothetical pre-infringement negotiation under hypothetical
conditions, would have anticipated the profit-making potential of use of the patented technology
to be, compared to using non-infringing alternatives.

...

[T]he district court did not err in considering IPC’s profits. But it did err in treating the profits
IPC actually earned during the period of infringement as a royalty cap. That treatment incorrectly
replaces the hypothetical inquiry into what the parties would have anticipated, looking forward
when negotiating, with a backward-looking inquiry into what turned out to have happened. fn 117

Updates to Georgia-Pacific

In Honeywell, Inc. v. Minolta Camera Co., the court’s jury instructions provided a list of factors to
consider when determining a reasonable royalty. fn 118 This list — which differs somewhat from the
Georgia-Pacific list of 15 factors but still highlights factors relevant to a license negotiation — includes
the following factors:

• The anticipated amount of profits the prospective licensor reasonably thinks would be lost, as a
result of licensing the patent, compared to the anticipated royalty income

• The relative bargaining strengths of both the patent owner and the infringer

• The anticipated net profits that the prospective infringer reasonably thinks it will earn

• The commercial past performance of the product, that is, in terms of profits and public
acceptance

• The market to be "tapped"

• Any other economic factor that would be taken into account by a normally prudent person or
entity, under similar circumstances, when negotiating a hypothetical license

fn 116 Id.

fn 117 Aqua Shield, 774 F.3d 766 (Fed. Cir. 2014).

fn 118 Honeywell, Inc. v Minolta Camera Co., Civil Nos. 87-4847, 88-1624 (N.D. N.J. 1992), jury instructions at 69.

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