Recent Article Analyzes Data and Concludes Patent Damages Awards Are Not Excessive; Rejects Need for Damages Law Reform

Michael J. Mazzeo (Northwestern University, Kellogg School of Management), Jonathan Hillel (Skadden, Arps), Samantha Zyontz (Searle Civil Justice Institute) published an article on February 24, 2011 entitled: "Are Patent Infringement Awards Excessive? The Data Behind the Patent Reform Debate." The abstract to the article (which can be found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1765891) states:

In their arguments for patent reform, proponents have cited cases with very large damage award amounts as evidence of pervasive "excessive" damages. This paper uses economic value of patents as a benchmark for comparison to conduct a systematic empirical analysis of patent damage awards to get a more complete understanding of the scope of the potential problem of "excessive" damage awards. We build a dataset consisting of information about damage awards in a comprehensive list of 340 cases decided in US federal courts between 1995 and 2008, supplemented with information about the litigants, their lawsuits and the economic value of the patents-at-issue. Our findings demonstrate that the largest awards dominating the conversation come from isolated cases: damage awards in the largest eight cases represent over 47% of total damages in our database. We build an econometric model based on our supplementary data that explains nearly 75% of the variation in observed damage award amounts, suggesting the awards are highly predictable and correlated with economic value of patents. We argue that the empirical results do not establish an argument for substantial patent reform based on a pervasive problem with "excessive" damages.

The article can be downloaded at the URL provided above.