How are lost profits calculated in a patent infringement case?

Business interruption loss of gross profit is calculated using the gross profit rate, the ratio of gross profit to turnover in the period before the interruption, applied to the shortfall in turnover during the period of indemnity. The gross profit rate is derived from the business's historical financial statements. Increased costs of working incurred to mitigate the loss are added, subject to the policy's provisions.

When is a reasonable royalty used instead of actual lost profits?

A reasonable royalty is typically used where the patent holder cannot establish one or more of the Panduit factors for actual lost profits, for example where capacity, demand, or non-infringing alternatives cannot be proven, or where the parties agree that a royalty measure better reflects the economic contribution of the infringed IP. Experts often present both measures for comparison.

IP Infringement Lost Profits Expert Witness

Expert analysis of lost profits arising from intellectual property infringement, patent infringement lost profits, trademark infringement lost revenue, copyright infringement lost licensing income, and trade secret misappropriation. Reasonable royalty analysis and actual lost profits compared.

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What This Covers

Scope of Analysis

Actual lost profits from IP infringement
Reasonable royalty rate determination
Price erosion and market dilution analysis
Lost licensing income quantification
Trade secret misappropriation damages

When You Need This

Typical Instructions

Patent infringement commercial damages
Trademark and brand dilution claims
Copyright licensing disputes
Trade secret and confidential information claims

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For the analytical frame behind royalty versus actual lost profits, see our reasonable royalty methodology guide on the expertise page.

Our Approach

Methodology & Delivery

“We compare actual lost profits against a reasonable royalty baseline, using market licensing data, the claimant's pricing history, and the economic contribution of the infringed IP to the product or service.”

Report Standards

CPR Part 35 · FRE Rule 702 / Daubert · IBA Rules

Engagement Type

Single party · SJE · Tribunal-appointed · Advisory

Forums

High Court · Commercial Court · ICC · LCIA · SIAC · ICSID · US Federal

Related Services

See our Loss of Profits Quantification service →

FAQ

Common Questions

How are lost profits calculated in a patent infringement case?: Business interruption loss of gross profit is calculated using the gross profit rate, the ratio of gross profit to turnover in the period before the interruption, applied to the shortfall in turnover during the period of indemnity. The gross profit rate is derived from the business's historical financial statements. Increased costs of working incurred to mitigate the loss are added, subject to the policy's provisions.
When is a reasonable royalty used instead of actual lost profits?: A reasonable royalty is typically used where the patent holder cannot establish one or more of the Panduit factors for actual lost profits, for example where capacity, demand, or non-infringing alternatives cannot be proven, or where the parties agree that a royalty measure better reflects the economic contribution of the infringed IP. Experts often present both measures for comparison.

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