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Two principles are central to the law of patent infringement damages. The first is that, pursuant to the long tradition of common law burdens of proof, plaintiffs bear the burden of proving damages. The second is that, pursuant to the statute, damages awards must not be less than a reasonable royalty.

In the context of patent damages (and, indeed, in many other similar contexts as well) these two principles end up being in deep tension with each other. This is because, in almost all cases, we can be certain that the correct amount of a reasonable royalty is greater than zero. At the same time, in almost all cases, the evidence about the precise amount of what a reasonable royalty would have been involves unreliable guesswork. The main standard for determining the precise amount of a reasonable royalty is to ask what royalty a hypothetical licensing negotiation before infringement would have yielded. Since the negotiation is hypothetical, it inherently requires some element of speculation to know its precise result.

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TJ Chiang

T.J. Chiang is an Assistant Professor of Law at George Mason University School of Law. He writes primarily in the area of intellectual property. His articles have appeared in various law reviews including the Michigan Law Review, the Northwestern University Law Review, and the Yale Law Journal.

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