Definition
A reasonable royalty is the floor for patent damages, representing the royalty the parties would have agreed to in a hypothetical negotiation before infringement began.
Why It Matters Legally
Reasonable royalty is the default damages measure when lost profits cannot be proven. How courts model the hypothetical negotiation can produce very different awards, making it a key litigation issue.
Example Use Case
Unable to prove lost profits, a patent owner recovers a reasonable royalty calculated as a percentage of the infringer’s sales.
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Related Terms
Damages, Lost Profits, Royalty, Enhanced Damages, Patent Litigation