Damages under the Entire Market Value and Convoyed Sales Rules

In patent infringement cases, defining the scope of the real injury to the patentee poses a challenge when the patent only covers a portion of a product or system. Courts have developed the entire market value and convoyed sales rules in an attempt to address the true economic loss to the patentee caused when the patented invention is part of a more complex product or of a larger system of goods sold together. These doctrines have been criticized for a number of years and are the targets of legislative activity. See, e.g., Patent Reform Act of 2005, H.R. 2975, 109th Cong. '6(1)(B) (2005). In the Patent Reform Act of 2005, Congress' proposed amendment to the damages section of the patent laws would have allowed patentees to recover for only 'the portion of the realizable profit that should be credited to the inventive contribution.' Although Congress did not pass the Patent Reform Act of 2005, similar legislation could eliminate confusion and some arguable overreaching found in the numerous court rulings that have attempted to address this damages problem. Until that occurs, a thorough understanding of the entire market value rule and its companion concept, convoyed sales, will allow patentees to increase their damages recovery and prepare alleged infringers to limit their liability.