The article discusses the significance of structural demand estimation in patent damages calculations, which compare outcomes with and without infringement. The U.S. Court of Appeals defines patent damages based on the patent owner’s financial condition post-infringement versus a hypothetical non-infringing scenario. Effective counterfactual analysis is necessary, demanding credible economic proof to avoid speculation. While such analyses are common in economic literature, their application in legal contexts, particularly for damages, is not as widespread, highlighting the importance and complexity of estimating consumer demand and market behavior for accurate damage assessments.
If the infringing product B did not exist, would consumers be more likely to switch to patented product A, or to third-party product C?
The statutory measure of "damages" is "the difference between [the patent owner's] pecuniary condition after the infringement, and what his condition would have been if the infringement had not occurred...."
Reconstructing the market... by definition a hypothetical enterprise, requires the patentee to project economic results that did not occur.
...counterfactual analysis... requires sound economic proof of the nature of the market and likely outcomes with infringement factored out.
#intellectual-property #patent-law #economic-analysis #counterfactual-analysis #structural-demand-estimation
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