Brian Brunsvold
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Attorney, Washington, D.C., USA

John C. Paul
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Attorney, Washington, D.C., USA

REASONABLE ROYALTY AWARD CANNOT BE UPWARDLY ADJUSTED BASED ON LICENSES UNRELATED TO CLAIMED INVENTION

As a remedy for infringement, U.S. patent law allows patentees to receive damages that are not less than a reasonable royalty for the use of the invention by the infringer. Courts derive the reasonable royalty from a hypothetical negotiation between the patentee and the infringer at a time when the infringement began. Many factors, called Georgia-Pacific factors after a case of the same name, apply to the hypothetical negotiation. The first factor requires considering past and present royalties that the patentee received from licensing the patent in suit. In ResQNet.com Inc. v. Lansa Inc., Nos. 2008-1365, -1366, 2009-1030 (Fed. Cir. Feb. 5, 2010), the United States Court of Appeals for the Federal Circuit held that it is improper for courts to consider licenses with no relationship to the patented invention to determine the reasonable royalty.

ResQNet.com, Inc. (“ResQNet”), a software development company, owned patents related to screen recognition and terminal emulation processes to display information on personal computer screens. Lansa, Inc., also a software development company, distributed a terminal emulator program called “New-Look,” developed by an Australian company, in the United States. ResQNet charged Lansa with patent infringement for this program.