What is a reasonable royalty for patent infringement damages. ENPLAS v. SEOUL

A patent is a set of exclusive rights granted to the inventor of an invention which qualifies for patent protection. To be granted a patent in the United States an inventor must file a patent application with the Untied States Patent and Trademark Office. The patent application must demonstrate that the invention meets all the requirements to be granted a patent, namely that the invention is new, useful, and not obvious. If the Untied States Patent and Trademark Office determines that the patent application meets the requirements, a patent will be granted to the inventor. The owner of a patent is granted the exclusive right to make, use, sell or import the invention in the United States. If someone other than the patent owner attempts to exercise one of these exclusive rights that can be considered patent infringement. A patent owner can file a lawsuit in United States Federal Court to address patent infringement.

When a patent owner successfully demonstrates that patent infringement has occurred, the patent owner is entitled to damages from the defendant. The court shall award the patent owner damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the defendant, together with interest and costs as fixed by the court. This means that if a plaintiff cannot demonstrate monetary damages caused by patent infringement they can still recover the money the plaintiff could have earned if the defendant had licensed the patent.

An important point that must be remembered is that licensing agreements are related to patented technology. A licensing agreement would not involve products unrelated to a patented technology. This may seem obvious, but when a company has hundreds of products intended to serve the same purpose it is easy to forget a patent owner would only get a royalty on products which are related to the licensed patent.

ENPLAS DISPLAY DEVICE CORP v. SEOUL SEMICONDUCTOR CO, 2016-2599 (C.A.F.C. 2018) is a case which illustrates the factors to consider when calculating a reasonable royalty. This case revolves around the lights used to illuminate screens on devices like televisions and laptops. The plaintiff, Enplas is a Japanese manufacturer of plastic lenses used in “light bars,” which are used for backlighting displays in flat-screen televisions. SSC is a Korean company that manufactures and sells LEDs, which are also used in light bars for backlighting flat-screen televisions. From November 2010 to June 2011, SSC and Enplas collaborated to manufacture lenses for SSC’s light bars, which are covered by SSC’s patents. In 2012 Enplas provided the lenses to competitors, SSC’s accused Enplas of patent infringement, and Enplas filed a lawsuit to get SSC’s patents invalidated. The district court found for SSC, and calculated damages based on a reasonable royalty, including lenses that had not been accused of infringement. Enplas appealed to the Court of Appeals for the Federal Circuit.

The Federal Circuit vacated the damages and remanded the case for further consideration. The Federal Circuit held that a reasonable royalty cannot include activities that are not patent infringement. Patent damages are limited to compensation for the patent infringement.

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