Damages in Intellectual Property Litigation

Legal Compliance Resource
August 16, 2013 — 1,067 views  

With time, technology has also been advancing and its usage has become even more widespread. With this, litigation and intellectual property laws have become even more relevant. The law is generally protected and categorized under copyrights, trademarks, patent infringement, and trade secrets.

The damages in rational property litigation and infringement are usually measured on the basis of lost profits, which could have been earned by the plaintiff had it not been for the infringement. Measuring all these damages is typically estimated by the usage of a reasonable royalty. It is however not always possible to follow the market value rule during the early stages of the property, especially for products that haven’t produced revenue yet.

Cost Approach Method can be an Alternative

An easy alternative to the problem can be cost approach, which tends to measure the damage based on the amount of development and research that was factually used in order to create this property. The courts however, prohibit the usage of the cost approach in accordance to damages involving any established technology.

Courts reject the approach on the basis that such costs don’t necessarily bear any relation to the research’s market value, after it is developed. However, the courts have depended on the cost approach when it comes to cases involving disparagement or theft of the intellectual property, which includes trade secrets as well.

Elements to Consider While Calculating Damages

Quite a number of elements are taken into consideration while calculating the damages and development of the intellectual properties. Every element involved must be evaluated to get a proper estimation, during damage calculations.

Labor: Expenditure or costs related to all the employees, in terms of wages and salaries, consultants and the contractors who were directly related to all the developmental efforts, must be evaluated. This plays an important role while trying to calculate the estimated damages.

Materials: Expenditures and costs related to every tangible element, which includes software, prototypes, components, and others must be included in the evaluations. Every element utilized in research and development of the intellectual properties must be added to the calculations in order to get an accurate result.

Overhead: Expenditures or costs regarding the supervision and support of the development team are important to evaluate. The costs could be related to payroll taxes, supervisory and management personnel charges, fringe benefits, utilities, secretarial and support staff charges, operating expenses and equipment rentals.

Legal Charges: Even the expenditures and costs related to registering the property or even related to the obtainment of legal protection needs to be evaluated. It is necessary to include these costs as well in order to make an accurate estimation of all damages of the property.

In today’s times, the law for intellectual properties has been receiving a lot of attention than before. However, there is still a lot to be said about the remedies and damages available for the same. It is important that all the costs are carefully documented in order to show how exactly they are related to the development of the work related to the intellectual properties. This will eventually help in calculating the damages involved.

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