Reconsidering the Georgia-Pacific Standard for Reasonable Royalty Patent DamagesBrigham Young University Law Review (2010)
AbstractDetermining damages for infringement is one of the most important—and controversial—issues in current patent litigation. The current fifteen-factor Georgia-Pacific standard for determining a reasonable royalty has become increasingly difficult for juries to apply in patent disputes involving complex, high-technology products, resulting in unpredictable damage awards that tend to overcompensate patentees. This Article proposes a more manageable alternative to Georgia-Pacific when an acceptable noninfringing substitute for the patented technology exists. Specifically, in a hypothetical bargain for a patent license, both economic and negotiation theory explain that a rational patent licensor would agree to pay only the costs it would incur to adopt and implement a noninfringing substitute technology, plus any lost benefits related to the substitute’s use. Indeed, the Federal Circuit already has recognized an analogous limitation on damages in the context of lost profits, although it has defined the universe of alternatives too narrowly by refusing to consider imperfect substitutes for the patented technology.
Citation InformationChristopher B. Seaman, Reconsidering the Georgia-Pacific Standard for Reasonable Royalty Patent Damages, 2010 BYU L. Rev. 1661.