July 26, 2016 Articles

Lost Profits Involving Head-to-Head Competitors

The Federal Circuit provides guidance on the quantification of lost profits in patent infringement cases and the role of reasonable certainty.

By John R. Bone, Marylee P. Robinson, and Stephen A. Holzen

The Federal Circuit’s November 2015 opinion in Akamai Technologies, Inc. v. Limelight Networks, Inc.,805 F.3d 1368 (Fed. Cir. 2015), is a reminder of the distinction between the fact of and the amount of damages. The ruling also emphasizes that reasonable certainty is the standard for proving lost profits in a patent infringement matter. Given the court’s recent focus on methods for calculating damages, this opinion is noteworthy because it does not address the amount of lost profits; rather, it addresses the question of whether there was a reasonable certainty that Limelight’s alleged infringement caused damage to Akamai. 

Reasonably certain evidence of lost profits is a fact-intensive determination. To collect lost profits, a “patentee must show a reasonable probability that ‘but for’ the infringing activity, the patentee would have made the infringer’s sales.” Ericsson, Inc. v. Harris Corp., 352 F.3d 1369, 1377 (Fed. Cir. 2004). “Reasonably certain” and “reasonable probability” are not concretely defined, and courts agree that reasonable certainty as to damages is a flexible, inexact concept.  

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