One method of calculating reasonable royalty damages in patent cases, as well as in some other intellectual property matters, imagines a hypothetical negotiation between the parties. In theory, this fictional negotiation occurs just prior to the date of first infringement, and it assumes that both parties are willing negotiators and privy to all relevant information.
Although the reasonable royalty is hypothetically negotiated prior to first infringement, the courts generally have allowed information about subsequent events to be used in arriving at a reasonable royalty. However, courts also have ruled that information about subsequent events is not relevant, or not allowed, in certain circumstances. This article summarizes certain seminal, as well as more recent, decisions that address the "book of wisdom."