Ongoing Royalties in Patent Cases after eBay: An Empirical Assessment and Proposed Framework

Abstract

While the Federal Circuit has authorized the award of ongoing royalties as an equitable alternative to a permanent injunction, numerous questions regarding such relief remain unresolved, including when ongoing royalties should be awarded, the structure and methodology for computing an award, and possible enhancement of the royalty rate for post-judgment willful infringement. Despite lower courts\u27 attempts to grapple with these issues, a comprehensive methodology for determining ongoing royalties has yet to emerge. This Article seeks to fill this void in two ways. First, it empirically assesses how courts have resolved claims for ongoing royalties by prevailing patentees. It does so by reporting the results from an original dataset of district court decisions on ongoing royalties following eBay. Second, based in part on insights from this empirical study, it proposes a new framework for determining ongoing royalty awards. In particular, this framework is designed to avoid over- or under-compensation of patentees by requiring consideration of actual or anticipated changes to the relevant product market as well as potential future alternatives to the patented technology in determining the amount of an ongoing royalty award. The balance of this Article is organized as follows. Part II discusses prospective remedies in patent law prior to the eBay decision. It also analyzes the eBay decision and its impact on the availability of injunctive relief for PAEs. Part III assesses ongoing royalties as an alternative to permanent injunctive relief and evaluates several unresolved issues regarding ongoing royalty awards. Part IV describes the methodology and findings from the author\u27s empirical study of ongoing royalty awards following eBay. Finally, Part V proposes a new framework for computing ongoing royalty awards in future cases