Reasonable Certainty in Contract and Patent Damages

Abstract

In the face of difficult-to-quantify private-law harms, courts commonly apply standards of reasonableness in assessing whether asserted damages have been proven with adequate certainty. In contract cases in particular, courts have a historical reputation for being demanding in applying a requirement of “reasonable certainty” for compensatory damages. Contract law’s reasonable certainty standard provides useful lessons for how courts might approach the award of reasonable royalty damages in patent law. Quite generally, contract law’s reasonable certainty standard indicates how courts can be demanding but also flexible in determining what constitutes competent evidence for a difficult-to-quantify harm. More specifically, judicial approaches to implementing the reasonable certainty standard suggest that, in calibrating and enforcing evidentiary standards for reasonable royalty damages, courts might helpfully consider the blameworthiness or egregiousness of parties’ conduct, the state of the art or of available evidence for proving damages, and the amount of damages alleged.

Keywords: patent damages, contract damages, reasonable royalty, reasonable certainty, damages valuation