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Calculation of Lost Profits Damages in Patent Cases

By Michael M. Carlson
January 28, 2005

Part One of a Two-Part Series

Upon a finding of patent infringement, a court is to award the patentee “damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.” 35 U.S.C. '284. In most cases, the patentee will be entitled to a larger damage award if it can recover damages based on lost profits. Lost profits are not, however, available in all cases. This two-part article will review the current state of the law governing the availability of lost profits damages in patent infringement cases in the first part and the calculation of these damages based on diverted sales in the second part.

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