Convergence: A Common Framework for Lost Profits and Reasonable Royalty Damages Using the Footprint Approach

The patent litigation bench and bar view lost profits and reasonable royalties as two entirely separate forms of damages with separate bodies of law. But both arise from the same statute (§ 284) and its early interpretation by the U .S. Supreme Court. The economic underpinnings of the two are the same. The dramatic fork the two approaches have taken has unnecessarily increased the complexity and transaction cost of patent negotiations and litigation, imposing heavy burdens on both the parties and the courts. The “footprint” approach set forth previously in the context of reasonable royalty damages provides a framework for returning to convergence between lost profits and reasonable royalty measures of patent damages.