Mars v. Coin Acceptors and the ‘Hypothetical Negotiation’ Approach to Reasonable Royalty Calculations

Jonathan Tomlin
Navigant Economics

August 5, 2008

Abstract:

In its recent decision in Mars, et al. v. Coin Acceptors Inc., the Federal Circuit ruled that reasonable royalty damages were not capped by the amount an infringing firm could have paid to avoid infringement. In other recent decisions the Federal Circuit concluded that a reasonable royalty was not capped by the expected profits of the infringing firm. As I explain below, these decisions are consistent with a compensatory damages rule that fully compensates a patent holder in circumstances in which a «hypothetical negotiation» between the patent holder and the infringing firm would have been unlikely to lead to any license agreement.

Mars v. Coin Acceptors and the ‘Hypothetical Negotiation’ Approach to Reasonable Royalty Calculations

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