Chapter §20.08 Prejudgment Interest

• Jurisdiction: United States

§20.08 Prejudgment Interest

Prejudgment interest (sometimes referred to as "delay compensation") is awarded under 35 U.S.C. §284¹¹⁶⁸ in order to make the patentee whole, by compensating it for "the forgone use of the money [owed by the infringer to the patentee] between the time of infringement and the date of the judgment."¹¹⁶⁹ In other words, had the infringer paid the infringement damages (in the form of reasonable royalties or lost profits) to the patentee at the time they were actually incurred (i.e., the time of the infringement), the patentee presumably could have earned interest by investing this money. An award of prejudgment interest attempts to approximate the interest that the patentee would have earned during the period of time between the infringement and the judgment.¹¹⁷⁰

The U.S. Supreme Court has provided that "pre-judgment interest should ordinarily be awarded."¹¹⁷¹ The Federal Circuit accordingly holds that in patent infringement cases, " 'prejudgment interest should be awarded under §284 absent some justification for withholding such an award.' "¹¹⁷²

The Federal Circuit has further held that prejudgment interest is available only for that portion of a damages award representing compensatory (actual) damages, not for any portion representing enhanced damages.¹¹⁷³

In Sanofi-Aventis v. Apotex Inc.,¹¹⁷⁴ the Federal Circuit interpreted a settlement agreement between two parties involved in a long-running Hatch-Waxman Act dispute over patented clopidogrel bisulfate tablets. The agreement provided that if the U.S. Food and Drug Administration denied generic manufacturer Apotex's Abbreviated New Drug Application (ANDA), the previously stayed litigation between the parties would resume and "[i]f the litigation results in a judgment that [Sanofi's] '265 patent is not invalid or unenforceable, Sanofi agrees that its actual damages for any past infringement by Apotex, up to the date on which Apotex is enjoined, will be 50% of Apotex's net sales of clopidogrel products."¹¹⁷⁵

Under the facts of the case and applying New York state contract law, the Federal Circuit in Sanofi-Aventis concluded that the patentee's agreement to limit itself to "actual damages" foreclosed any award of prejudgment interest. In the Federal Circuit's view, "the parties intended that the phrase 'actual damages' include all damages necessary to compensate Sanofi for Apotex's infringement."¹¹⁷⁶ Prejudgment interest is a form of compensatory damages under 35 U.S.C. §284. Hence...