USA Law and Practice Contributed by: Jim Hurst, Jeanna Wacker, Sam Kwon and Ashley Ross, Kirkland & Ellis
5.4 Damages Under 35 USC Section 284, courts shall award the patent owner damages adequate to com - pensate for the infringement but in no event less than a reasonable royalty, together with interest and costs fixed by the court. Two main types of damage awards are reason - able royalties and lost profits. A reasonable roy - alty is an estimation of the royalty that a licensee would pay for the rights to the claimed inven - tion in a hypothetical negotiation. Lost profits are profits that a patent owner would have made if an infringer had not infringed. Damage awards may encompass both lost profits and a reason - able royalty. To obtain lost profits, a patent owner must show that there is a reasonable probability that but, for the infringement, the patent owner would have made the infringer’s sales. One useful, but non- exclusive, method to establish the entitlement to lost profits is the Panduit test, which requires a patent owner to establish (Rite-Hite Corp v Kel - ley Co, 56 F.3d 1538, 1545 (Fed Cir 1995) (en banc)): • demand for the patented product; • absence of acceptable non-infringing alterna - tives; • manufacturing and marketing capability to exploit the demand; and • the amount of profit it would have made. Determination of reasonable royalties could be based on established royalty rates, a hypo - thetical negotiation, or an analytical approach. Established royalty rates must come from pre- infringement licence agreements on comparable technology. In the absence of established royalty rates, a court may consider a hypothetical nego - tiation between a willing licensor and licensee
If an ANDA is approved and the drug is already on the market, an injunction could be obtained under a four-factor test showing: • the patent owner has suffered an irreparable injury; • remedies, such as monetary damages, are inadequate; • the balance of hardships favours the patent owner; and • the permanent injunction would not hurt pub - lic interest (Weinberger v Romero-Barcelo, 456 US 305, 312 (1982)). A permanent injunction is ordinarily effective upon issue and, if not stayed, also effective pending appeal. When a party decides to appeal an issued injunction, a court also have the power to grant a stay. 5.3 Discretion to Award Injunctive Relief (Final or Preliminary) In the US, monetary damages and injunctions are not mutually exclusive – for example, a court may award monetary damages for past infring - ing acts, while issuing injunctions to prevent future infringement. However, in ANDA actions, monetary damages may be awarded only after the infringer launches at risk. For certain pharmaceutical products, the pub - lic interest factor for injunctive relief could be especially important. A patent owner may argue for an injunction based on safety concerns, for example. An accused infringer, on the other hand, may argue that the court should not issue an injunction that takes life-saving drugs off the market if they cannot be substituted by another product.
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