Here We Go Again: Patent Reform Act of 2011

As Patent Baristas reminds us, the Patent Reform Act of 2011 is on the Judiciary Committee’s agenda for quick attention. We’ve heard this before, and most will say “tell me more when there is more.”  We get that.  Key to watch in this bill is SEC. 4, on Damages (see page 31), which calls for the courts to “identify the methodologies and factors that are relevant to the determination of damages, and the court or jury shall consider only those methodologies and factors relevant to making such determination.”

The section further calls on the parties in litigation to make a case for, to justify, the methodologies they used for purposes of proposing instructions to the jury charged with determining damages.  Though certainly open ended, the language is still pointed:  “…the court shall identify on the record those methodologies and factors as to which there is a legally sufficient evidenciary basis …,”  and the court will only permit the introduction of evidence it feels is relevant.

This indicates to us that further lines in the sand are being drawn with respect to specificity when it comes to damages calculation.  General or untested theories or use of traditional rules of thumb aren’t going to be accepted.  Royalty rates will require source documents, like industries, situations, IP and dates, and “selling” the methodology used will entail testing multiple methodologies and demonstrating one’s particular relevance over the others by also demonstrating why other methodologies aren't applicable or optimal.