[Pharm-policy] Michael Pegues on setting royalties in patent litigation

[James Love]

http://www.hayboo.com/briefing/6_29_00Pegues.htm
 Protecting Patents, Trademarks, Copyrights:
 Remedies for Infringement 
 For Presentation
 Houston, Texas: June 29-30, 2000 and September 14-15, 2000
 Dallas, Texas: July 6-7, 2000 and September 21-22, 2000 
 The University of Houston Law Foundation: Corporate, Partnership and
Business
 Law Seminar and Representing New Businesses and Startups Seminar
 Michael Pegues - Intellectual Property Litigation

 This is an interesting page with a lot of discussion of court set
royalties in patent disputes.  Here is an excerpt from one case
mentioned.

[snip]

In the course of a bench trial, GPC sought damages for lost profits
based on lost sales of GPC's food additive, price erosion, and
accelerated market entry by AMP after the patent expired. GPC further
claimed that for any of AMP's sales not covered by an award of lost
profits, GPC was entitled to a 28% royalty on AMP's infringing sales.
The district court held that a 3% reasonable royalty was adequate to
compensate GPC, and denied recovery of lost profits entirely. (The
district court held that the fourth process constituted an "available"
non-infringing substitute sufficient to bar the recovery of lost
profits, and this issue is discussed further below.) Id. at 1347. 

The Federal Circuit held that the district court had supported its
royalty analysis with sound economic data and with actual, observed
behavior in the market, and also commented:

"The [district] court candidly stated that the 3% rate is its "best
estimate," an honest observation that would apply to most reasonable
royalty analyses, given the difficulty of determining a hypothetical
agreement between parties which did not actually agree on anything at
all."

  [snip]

James Love, Consumer Project on Technology
v. 1.202.387.8030, fax 1.202.234.5176
love@cptech.org, http://www.cptech.org