Winning the Patent Damages Case

reviewed by Ted M. Sichelman

With just 5 percent to 10 percent of all patent-infringement actions going to full judgment, assessing damages is often the last thing on a patent litigator's mind at the beginning of a case. Usually claim-construction, infringement, and validity issues occupy the bulk of a case until the end of discovery. But in Winning the Patent Damages Case, Richard F. Cauley, a longtime patent litigator based in Newport Beach, makes a strong case that damages issues should be taken seriously early on. Doing so helps not only in promoting settlement but also in locating crucial discovery and avoiding missteps in "framing" a case, for plaintiffs and defendants alike.

In his short book designed to introduce litigators to this complex topic, Cauley clearly and concisely provides the essential tools to mount a strong damages case, as well as to defend against one. The first two-thirds of the book is devoted to a "reasonable royalty" case, which is where the plaintiff seeks some percentage of the defendant's revenue or profits from infringing the plaintiff's patent. In addition to recounting, explaining, and exploring the 15 well-worn Georgia-Pacific factors used to assess the proper measure of a reasonable royalty, Cauley provides useful historical background on the genesis of the factors and sets forth concrete strategies for litigation, in the context of actual examples of how the factors have been applied. Although his brief foray into law and economics - particularly his critique of the work of Stanford Law School's Mark Lemley - is slightly misguided because it overstates the importance of the patentee's market position, all in all Cauley's treatment is accurate and highly applicable to real-world litigation. The same applies to the last third of the book, which tackles "lost profits" measures for damages.

When litigators need to learn - or even bone up on - a particular topic in patent law but don't have the time to peruse Donald Chisum's learned 27-volume treatise, Chisum on Patents (Matthew Bender, 2008), or to perform several acts of legal hermeneutics on the most recent Federal Circuit decisions, they turn to works like Alan Durham's outstanding Patent Law Essentials (Praeger Paperback, third ed., 2009). Indeed, when I was a junior patent litigator at Irell & Manella, I was handed a copy of Durham and still refer to it when teaching patent law.

Although Durham's work has a chapter on damages, Cauley's book is - to his credit - a sort of "Durham on Damages": a quick read with all the critical information needed by litigators, not academics. To be sure, Cauley would be well advised to follow Durham's template and add a few more ready-to-use case citations in the next edition's footnotes. Despite this and other minor blemishes, any litigator who is serious about developing a damages case - and who has not mounted at least two already - should peruse Cauley's book, whether in whole to learn the subject afresh, or in part to shore up knowledge in a particular area.

Ted M. Sichelman is the Kauffman Foundation Legal Research Fellow and Lecturer at the UC Berkeley School of Law, where he teaches patent litigation.

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