Patent Damages Toolkit: Royalty Models, Expert Reports, and Daubert Motions

Summary. The working documents of a patent damages case, annotated.

Template 1 — Marking audit worksheet

Owner: patentee's counsel, before filing. Defendant's counsel, in the first month.

What it prevents: the discovery, in expert discovery, that a licensee's unmarked product eliminated three years of damages.

Template 2 — Damages discovery requests (core set)

Adapt to local rules and numerical limits.

Financial:

1. Monthly unit sales and revenue for each accused product, by customer or customer segment, for the damages period, produced in native format with field definitions.
2. Cost of goods sold and standard cost build-ups for each accused product.
3. Documents identifying which costs vary with unit volume.
4. Price lists, discount schedules, rebate programs, and pricing approvals.
5. Gross and operating margin reports at the product-line level.

Licensing: 6. All licenses granted or taken involving the accused technology or comparable technology. 7. All communications negotiating those licenses, including term sheets and rejected proposals. 8. All valuations of the patent or portfolio for any purpose. 9. All settlement agreements resolving patent claims involving the accused products.

Commercial: 10. Marketing materials, product datasheets, and website content describing the accused feature. 11. Win/loss analyses and competitive comparisons. 12. Customer requests, RFP responses, and specifications referencing the accused capability. 13. Product roadmaps, business cases, and ROI analyses mentioning the accused feature.

Alternatives and willfulness: 14. Design-around analyses, including projects considered and not pursued. 15. Documents identifying non-infringing alternatives available during the period. 16. All documents referencing the patent-in-suit, the patentee, or the patentee's products. 17. Documents concerning the decision to continue selling after receipt of any notice.

Template 3 — License comparability memorandum

One per license in the record. Owner: the license owner.

LICENSE: [parties, date]
STRUCTURE: [running royalty / lump sum / paid-up / cross-license / hybrid]
RATE OR AMOUNT: [ ]
BASE: [what the rate applies to]
SCOPE: [patents covered, field of use, territory, term]
CONTEXT: [arm's length / settlement of litigation / part of larger transaction]

COMPARABILITY ANALYSIS
  Technology:   same / adjacent / different — explain
  Timing:       how far from the hypothetical negotiation date?
  Parties:      relative size, bargaining position, market role
  Scope:        broader or narrower than the hypothetical license?
  Structure:    does the form require conversion to a running rate?

ADJUSTMENTS REQUIRED
  [each adjustment, its direction, its magnitude, and its basis]

CONCLUSION
  This license [does / does not] inform the hypothetical negotiation because [ ].

Note: an expert who relies on a license without this analysis is vulnerable under Federal Rule of Evidence 702. An expert who has done this analysis for every license in the record is difficult to cross-examine.

Template 4 — Apportionment worksheet

Rule: step 9 must have an answer that is not "the expert's judgment."

Template 5 — Lost profits model

A. PANDUIT ELEMENT ONE — DEMAND
   Evidence: total market sales, growth, customer inquiries

B. PANDUIT ELEMENT TWO — ABSENCE OF ACCEPTABLE SUBSTITUTES
   Competitor products available during the period ........ [list]
   For each: does it have the patented advantage? .......... [Y/N]
   Customers who specified the patented capability ......... [list, with cites]
   Units attributable to those customers ................... [n]
   Units where substitutes were acceptable ................. [n]

C. PANDUIT ELEMENT THREE — CAPACITY
   Plant utilization during the period ..................... [%]
   Incremental capacity available .......................... [units]
   Supply chain constraints ................................ [ ]

D. PANDUIT ELEMENT FOUR — PROFIT
   Price per unit .......................................... [$]
   Incremental cost per unit ............................... [$]
   Incremental margin ...................................... [$]

E. MARKET SHARE ALTERNATIVE
   Patentee's share of the relevant market ................. [%]
   Remaining infringing units .............................. [n]
   Units captured at market share .......................... [n]

F. PRICE EROSION (if claimed)
   But-for price ........................................... [$]
   Actual price ............................................ [$]
   Volume adjustment for elasticity ........................ [units]

G. CONVOYED SALES (if claimed)
   Items, functional relationship, margin ................... [ ]

H. TOTAL LOST PROFITS ..................................... [$]
I. UNITS REMAINING FOR ROYALTY ............................. [n]

Template 6 — Damages expert report outline

Doubles as the review protocol for the opposing report.

I.    QUALIFICATIONS
II.   ASSIGNMENT AND MATERIALS CONSIDERED
III.  SUMMARY OF OPINIONS
IV.   BACKGROUND
      A. The parties and the market
      B. The patented technology and its contribution over the prior art
      C. The accused products
V.    LEGAL FRAMEWORK AS EXPLAINED TO ME
      (35 U.S.C. § 284; Panduit; Georgia-Pacific; apportionment)
VI.   THE DAMAGES PERIOD
      A. Six-year limit under 35 U.S.C. § 286
      B. Marking and notice under 35 U.S.C. § 287
VII.  LOST PROFITS
      A. Panduit element analysis
      B. Market share analysis
      C. Price erosion
      D. Convoyed sales
      E. Computation
VIII. REASONABLE ROYALTY
      A. The hypothetical negotiation: date, parties, assumptions
      B. The royalty base and apportionment
      C. Comparable license analysis (one subsection per license)
      D. Georgia-Pacific factors that inform the analysis
      E. Rate determination
      F. Computation
IX.   PREJUDGMENT INTEREST
X.    SUMMARY TABLE OF DAMAGES
XI.   RESERVATION AND SIGNATURE

Template 7 — Expert deposition outline (damages)

Foundation

1. Materials reviewed; anything requested but not provided.
2. Reliance on counsel-prepared summaries versus underlying data.
3. Reliance on other experts and the boundaries of that reliance.

The base 4. What is the royalty base? Why? 5. What is the smallest salable patent-practicing unit? How determined? 6. Do you contend the patented feature drives demand for the entire product? 7. What evidence supports that? What evidence contradicts it?

Apportionment 8. What fraction of value do you attribute to the invention? How derived? 9. What would the result be at a fraction 10 points lower? Higher? 10. Who supplied the technical basis? What did you do to verify it?

The rate 11. Which licenses did you rely on? Which did you reject, and why? 12. For each adjustment: what is the basis and the magnitude? 13. Did you consider [each license produced in the case]?

The negotiation 14. What date? Why? What was known to the parties at that date? 15. What assumptions about validity and infringement did you make?

Lost profits 16. Which non-infringing alternatives did you consider? 17. What makes a substitute unacceptable in your analysis? 18. What is the basis for the capacity opinion? 19. Incremental versus gross margin: which did you use, and why?

Arithmetic 20. Walk me through the calculation from inputs to result.

Template 8 — Rule 702 motion outline

I.   INTRODUCTION
     One paragraph: what the opinion is, and the specific defect.
II.  LEGAL STANDARD
     FRE 702 as amended 2023; proponent's burden by a preponderance;
     reliable application of the methodology to the facts.
III. THE OPINION SHOULD BE EXCLUDED IN PART BECAUSE THE ROYALTY BASE
     VIOLATES APPORTIONMENT
     A. The accused feature is one of many in the end product
     B. No evidence the feature drives demand for the whole product
     C. The smallest salable unit is [ ]
IV.  THE ROYALTY RATE IS UNTETHERED TO CASE-SPECIFIC EVIDENCE
     A. The licenses relied on are not comparable
     B. The adjustments are unexplained
V.   THE APPORTIONMENT FRACTION IS UNSUPPORTED
VI.  THE HYPOTHETICAL NEGOTIATION DATE IS INCORRECT
VII. RELIEF REQUESTED
     [Full exclusion / exclusion of the EMV theory / limitation of the base]

Drafting note: each section should cite deposition testimony, not only the report. An expert's inability to defend a choice under questioning is more persuasive than the report's silence.

Template 9 — Willfulness evidence log

Categories to populate: knowledge of the patent; receipt and handling of notice; copying (teardowns, design references, hiring); the decision to continue selling; remedial steps; and any opinion of counsel and the waiver decision surrounding it under 35 U.S.C. § 298.

Template 10 — Settlement valuation model

Revise at every milestone. Never mediate without a current version.

1. DAMAGES MODEL (best case)                         $______
2. ADJUSTMENTS
   Damages period cutoff (§ 286)                    -$______
   Marking / notice limitation (§ 287)               -$______
   Apportionment risk                                -$______
   Rule 702 exclusion risk (probability × impact)    -$______
3. ADJUSTED DAMAGES                                   $______
4. ENHANCEMENT (probability × multiplier)             $______
5. FEES (probability × amount, signed)                $______
6. INJUNCTION VALUE (business estimate)               $______
7. GROSS EXPECTED VALUE                               $______
8. PROBABILITY OF REACHING JUDGMENT
   Survive § 101 motion              ____%
   Survive IPR                       ____%
   Survive claim construction        ____%
   Survive summary judgment          ____%
   Win at trial                      ____%
   Survive appeal                    ____%
   COMPOUND                          ____%
9. RISK-ADJUSTED VALUE                                $______
10. REMAINING LITIGATION COST                        -$______
11. **NET SETTLEMENT VALUE**                          $______

Template 11 — Damages verdict form skeleton

Question 1. Do you find that Plaintiff proved by a preponderance of the evidence that it lost profits as a result of Defendant's infringement? ☐ Yes ☐ No Question 2. If yes, state the amount of lost profits: $__________ Question 3. State the number of infringing units for which Plaintiff did not prove lost profits: __________ Question 4. State the reasonable royalty rate: __________ Question 5. State the royalty base per unit: $__________ Question 6. State the total reasonable royalty: $__________ Question 7. Do you find that Plaintiff proved by a preponderance that Defendant's infringement was willful? ☐ Yes ☐ No

Why the granularity matters: a verdict form that asks only for a total dollar figure is nearly unreviewable, which cuts both ways. Separating base and rate creates a record for post-trial motions and appeal.

Template 12 — Ongoing royalty briefing outline

Used when a permanent injunction is denied under the eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) factors.

I.   THE COURT'S AUTHORITY TO SET AN ONGOING ROYALTY
     35 U.S.C. § 283; equitable discretion following denial of injunction
II.  THE POST-VERDICT HYPOTHETICAL NEGOTIATION DIFFERS
     A. Validity is adjudicated
     B. Infringement is adjudicated
     C. The bargaining positions have changed
III. THE APPROPRIATE RATE
     A. The jury's rate as a starting point
     B. Changed circumstances warranting an increase
     C. Comparable post-verdict rates
IV.  SCOPE
     A. Which products
     B. Duration (patent expiry, design-around date)
     C. Reporting and audit provisions
V.   PROPOSED ORDER

Template 13 — Damages jury instruction checkpoints

Confirm the instructions state:

• Damages compensate; they do not punish. Punishment is for the court under § 284.
• The patentee bears the burden by a preponderance.
• The jury may award lost profits, a reasonable royalty, or both — but not both on the same units.
• A reasonable royalty is the floor; the jury may not award zero on proven infringement.
• The royalty must reflect the value of the patented feature, not the entire product, unless the entire market value rule is satisfied.
• The hypothetical negotiation occurs at the time infringement began and assumes validity and infringement.
• Damages may not include sales outside the damages period.
• The infringer's knowledge is relevant to willfulness, not to compensatory damages.

Template 14 — Post-trial motion calendar

Calendar all of these the day the verdict comes in. The § 285 fee deadline in particular is short and is missed.

Related documents

• Patent Damages: Reasonable Royalties, Lost Profits, Apportionment, and Enhancement
• Proving and Attacking Patent Damages: A Practical Guide
• Patent Damages Checklist: A Practical Checklist
• Claim Construction Toolkit: Charts, Briefs, Expert Declarations, and Hearing Materials
• Expert Witness Toolkit
• Fee-Shifting and Litigation Cost Recovery Toolkit
• Trial and Post-Trial Toolkit: From Pretrial Order to Judgment
• Civil Damages Toolkit: Contract, Tort, Statutory, and Punitive Recovery