Patent Damages in the UK: How Compensation is Calculated

When patent infringement is established in the UK, determining appropriate compensation requires careful analysis of the patentee's commercial circumstances, the nature of the infringement, and the financial impact on both parties.1 Unlike some jurisdictions, UK patent law offers successful claimants a choice between two distinct remedies: damages or an account of profits, but not both for the same infringement.23

This election between remedies is one of several features that distinguishes UK patent damages from other systems, particularly the US approach. In our experience as technical experts supporting patent litigation, the choice between damages and account of profits often depends on factors we help establish: the technical contribution of the patented invention, how that contribution translates to commercial value, and whether the patentee's or infringer's position provides the better basis for calculation.

Understanding how UK courts calculate patent compensation is essential for patent holders considering enforcement, defendants facing infringement claims, and businesses assessing litigation risk. In this guide, we explain the UK framework, compare it to the US approach, and examine how technical evidence supports damages calculations.

Important: This article provides general information about patent damages for educational purposes. It is not legal advice and should not be relied upon as such. Damages calculations involve complex legal and economic considerations that require qualified legal counsel. Always consult a solicitor or patent attorney before making decisions about patent enforcement or defence.

The UK Legal Framework for Patent Damages

Section 61 of the Patents Act 1977

The foundation for patent damages in England and Wales is Section 61 of the Patents Act 1977, which sets out the remedies available when patent infringement is proven.45 Under Section 61(1), the court may grant:

• An injunction restraining the defendant from any act of infringement
• An order to deliver up or destroy any infringing product
• Damages in respect of the infringement
• An account of profits derived by the defendant from the infringement
• A declaration that the patent is valid and has been infringed6

Critically, Section 61(2) provides that the court shall not grant both damages and an account of profits in respect of the same infringement.7 This creates the fundamental election that shapes UK patent damages strategy.

The Election Between Damages and Account of Profits

The choice between damages and account of profits represents a strategic decision that typically must be made after the liability phase of proceedings.8 Each remedy serves a different purpose:

Damages compensate the patentee for their loss caused by the infringement. The measure is what the patentee would have been in financially had the infringement not occurred.9

Account of profits requires the infringer to disgorge the profits they made from their infringement. The focus is on the infringer's gain rather than the patentee's loss.1011

In practice, this choice depends on commercial circumstances. A patentee who manufactures competing products may prefer damages if they can prove lost sales. A patentee who does not manufacture—or where the infringer made substantial profits—may find account of profits more advantageous.12

Innocent Infringement Defence

Section 62 of the Patents Act 1977 provides an important limitation: where a defendant proves they were not aware, and had no reasonable grounds for supposing, that the patent existed at the time of infringement, the court shall not award damages against them for that infringement.1314

This innocent infringement defence does not prevent injunctive relief or account of profits, but it can significantly reduce financial exposure. For patent holders, this underscores the importance of appropriate patent marking and timely notification of potential infringers.15

Damages Inquiry: The UK Approach

Procedural Framework

UK patent damages are typically determined in a separate "damages inquiry" following the liability trial.16 This bifurcated approach, governed by Part 63 of the Civil Procedure Rules and Practice Direction 63, allows the court to establish infringement and validity before undertaking the complex economic analysis required for damages calculation.1718

The damages inquiry follows the framework set out in Part 41 of the Civil Procedure Rules, which governs provisional damages and periodic payments.19 The inquiry may be conducted by a judge or, in appropriate cases, referred to a costs judge or master.20

Principles of Damages Assessment

UK courts apply established principles when assessing patent damages:

Compensatory principle: Damages aim to put the claimant in the position they would have been in had the infringement not occurred.21 The objective is compensation, not punishment.

Causation: The claimant must establish that their loss was caused by the infringement. Losses that would have occurred regardless of infringement are not recoverable.22

Foreseeability: Damages are limited to losses that were reasonably foreseeable at the time of infringement.23

Mitigation: Claimants have a duty to take reasonable steps to mitigate their losses and cannot recover losses that could reasonably have been avoided.24

Categories of Recoverable Damages

Depending on the patentee's commercial circumstances, UK courts recognise several categories of recoverable damages:

Lost profits on lost sales: Where the patentee manufactures and sells products covered by the patent, they may recover profits lost because infringing sales diverted customers.25

Price erosion: Even where sales are not entirely lost, infringement may force the patentee to reduce prices to remain competitive, resulting in reduced profit margins.26

Lost royalties: Where the patentee grants licences to others, they may recover royalties they would have received had the infringer taken a licence on usual terms.27

Reasonable royalty: Where the patentee neither manufactures nor licences, damages may be assessed as the royalty a willing licensor and willing licensee would have agreed.2829

Account of Profits: The UK Alternative

When Account of Profits is Preferable

Account of profits may be the better remedy where:30

• The infringer made substantial profits exceeding the patentee's provable losses
• The patentee does not manufacture competing products and cannot prove lost sales
• The patentee does not have an established licensing programme
• Evidence of the infringer's profits is more accessible than evidence of the patentee's losses

In the landmark case Celanese International Corporation v BP Chemicals Ltd 1999 RPC 203, the court provided detailed guidance on account of profits calculations, establishing principles that continue to govern this remedy.31

Calculation Methodology

The account of profits calculation requires determining:32

Revenue attributable to infringement: This requires identifying which sales involved infringing products and what portion of those sales relates to the patented features.33

Deductible costs: The infringer may deduct costs directly attributable to producing the infringing items. The treatment of overhead costs has been a contentious issue, with courts taking different approaches depending on the circumstances.3435

Apportionment: Where the patented feature forms only part of a larger product, the court must apportion to determine what proportion of profits is attributable to the infringement.36

Key UK Case Law on Account of Profits

Several cases have shaped UK account of profits jurisprudence:

Hollister Inc v Medik Ostomy Supplies Ltd 2012 EWCA Civ 1419 confirmed that when electing account of profits, the patentee cannot recover more than the infringer actually made—even if the patentee's losses were greater.37

Design & Display Ltd v Ooo Abbott and Others 2016 EWCA Civ 95 addressed apportionment where patented components were sold as parts of larger systems, requiring careful analysis of the contribution each component made to overall value.38

Icescape Ltd v Ice-World International BV 2018 EWCA Civ 2219 examined how to calculate profits where the infringer's business model involved both infringing and non-infringing activities.39

Reasonable Royalty: The Fallback Position

When Reasonable Royalty Applies

Where a patentee cannot establish lost profits or chooses not to pursue account of profits, damages may be assessed as a reasonable royalty.40 This approach asks: what would a willing licensor and willing licensee have agreed as the royalty rate in a hypothetical negotiation before infringement began?41

The reasonable royalty serves as a "floor" for damages, ensuring patent holders receive at least some compensation even where specific losses cannot be proven.42

Factors in Reasonable Royalty Assessment

UK courts consider various factors when determining reasonable royalty rates:43

• Existing licences: Royalties the patentee has charged others provide strong evidence of market value
• Industry licensing practices: Standard rates in the relevant industry offer benchmarks
• Patented feature's contribution: The technical and commercial significance of what the patent protects
• Available alternatives: Whether non-infringing alternatives existed and their commercial viability
• Profit margins: What royalty rate the parties could commercially bear
• Duration and scope: The extent of the licence that would have been granted44

Comparison with US Georgia-Pacific Framework

The US employs a more structured approach through the Georgia-Pacific factors—fifteen considerations established in Georgia-Pacific Corp. v. United States Plywood Corp. (1970).45 While UK courts consider similar factors, the approach is less formulaic and more focused on the specific commercial context of each case.46

Factor	UK Approach	US Georgia-Pacific
Comparable licences	Strong evidence, examined contextually	Factor 1-2: Prior royalties and licensee rates
Hypothetical negotiation	Flexible framework	Factors structured around negotiation construct
Apportionment	Case-by-case analysis	Factor 13: Express apportionment factor
Profit margins	Considered in commercial context	Factors 11-12: Infringer's use and profit portion
Technical contribution	Expert evidence on value	Factor 9-10: Utility and advantages

Apportionment: The Technical Expert's Role

Why Apportionment Matters

Modern products typically incorporate multiple patented technologies alongside non-patented features.47 When calculating damages, courts must isolate the value attributable to the specific patent at issue—a process called apportionment.48

We regularly provide technical expert evidence supporting apportionment analysis. This involves identifying what the patent actually protects, how that feature contributes to the product's functionality and commercial appeal, and what portion of the product's value derives from the patented invention versus other elements.49

Technical Contribution Analysis

Technical experts help establish:

What the patent covers: Claim construction determines the scope of protection, but technical expertise is needed to explain what that scope means in practical terms.50

How the feature functions: Understanding the technical operation helps assess its contribution to the product's overall functionality.51

Commercial implementation: The patented feature may be implemented differently in the commercial product than described in the patent, affecting its relative contribution to value.52

Alternative approaches: Whether non-infringing alternatives existed and their technical and commercial viability informs both damages calculation and apportionment.53

The Entire Market Value Problem

A significant issue in patent damages is whether the patentee can claim damages based on the entire product's value or only the patented component.54 UK courts, like their US counterparts, have grappled with this question.

The general principle is that damages should be tied to the patent's "footprint in the marketplace"—the value the patented feature actually contributes.55 Where the patented feature is merely one component of a complex product, damages based on the entire product's value would overcompensate the patentee.56

However, where the patented feature is the primary driver of customer demand—what makes the product commercially successful—broader damages may be appropriate.57

UK vs US: Fundamental Differences in Approach

Structural Differences

The UK and US patent damages systems reflect different legal traditions and policy objectives:58

Aspect	UK Approach	US Approach
Primary statute	Patents Act 1977, Section 61	35 U.S.C. § 284
Remedy election	Damages OR account of profits	Damages only (no account of profits)
Enhanced damages	Not available	Up to treble damages for wilful infringement
Jury determination	No jury; judge decides	Jury typically decides damages amount
Procedural approach	Often bifurcated (liability then damages)	Usually unified trial
Costs recovery	Loser pays (subject to caps in IPEC)	Each party bears own costs (except exceptional cases)

Account of Profits vs Lost Profits

A fundamental distinction is the availability of account of profits in the UK, which has no direct equivalent in US federal patent law.59

UK account of profits focuses on the infringer's gain. The question is: what profit did the infringer make from their wrongful conduct?60

US lost profits focuses on the patentee's loss. The question is: what would the patentee have earned but for the infringement?61

This difference can produce substantially different results. An infringer who made large profits may face significant liability under UK account of profits even where the patentee cannot prove equivalent losses. Conversely, a patentee with substantial provable losses may be undercompensated by account of profits if the infringer's margins were thin.62

The Panduit Test in US Law

US lost profits analysis employs the Panduit test, requiring the patentee to prove:63

1. Demand for the patented product
2. Absence of acceptable non-infringing substitutes
3. Manufacturing and marketing capability to exploit the demand
4. The amount of profit that would have been made

This structured test has no direct UK equivalent, though UK courts consider similar factors when assessing lost profits claims.64

Enhanced Damages and Wilful Infringement

A significant difference is the availability of enhanced damages in the US. Under 35 U.S.C. § 284, courts may increase damages up to three times for wilful infringement.65 The Supreme Court's 2016 decision in Halo Electronics, Inc. v. Pulse Electronics, Inc. expanded judicial discretion to award enhanced damages.66

UK law does not provide for punitive or enhanced damages in patent cases. Damages remain compensatory, aimed at restoring the patentee rather than punishing the infringer.67 Additional costs awards may be made where conduct warrants, but these operate through the costs regime rather than damages enhancement.68

Costs and Practical Realities

UK Litigation Costs

Patent damages proceedings must be understood in the context of UK litigation costs:

Patents Court costs for a full liability trial plus damages inquiry typically range from £500,000 to £2,000,000+ depending on complexity.69

IPEC costs are capped at £50,000 for liability proceedings and £25,000 for inquiry as to damages, making this venue more accessible but limiting recoverable costs.70

IPEC damages cap: The Intellectual Property Enterprise Court can award damages of up to £500,000, which may make the Patents Court preferable for high-value disputes despite higher costs.71

Cost-Benefit Analysis

Before pursuing damages claims, patentees should consider:

• Potential recovery: Is the likely damages award sufficient to justify litigation costs?
• Defendant's solvency: Can the defendant actually pay any judgment obtained?
• Evidence availability: Is sufficient evidence available to prove losses or infringer profits?
• Commercial objectives: Would injunctive relief alone achieve the patentee's goals?

In our experience, the decision to pursue damages versus accepting injunctive relief often depends on these practical considerations as much as legal entitlements.

Settlement Considerations

Most patent disputes settle before damages inquiry. Understanding damages principles helps inform settlement negotiations by establishing the range of likely outcomes if the matter proceeds to inquiry.72

Settlement offers should be evaluated against:

• Realistic damages assessment (not best-case scenarios)
• Litigation costs to inquiry
• Time and management distraction
• Relationship considerations for ongoing commercial dealings

The Technical Expert's Contribution to Damages

Areas of Technical Expert Input

Technical experts support damages calculations in several ways:

Claim construction and infringement scope: Understanding what the patent covers helps define the scope of infringing activity and thus the base for damages calculation.73

Technical apportionment: Identifying the patented feature's contribution to overall product functionality and value.74

Non-infringing alternatives analysis: Assessing whether technically and commercially viable alternatives existed that the infringer could have used.75

Product development evidence: Evaluating the infringer's design choices and whether they were driven by the patented technology or other factors.76

Industry context: Providing technical background on industry practices, standard approaches, and the significance of the patented innovation.77

Working with Economic Experts

Technical experts typically work alongside economic or financial experts who quantify the damages based on technical findings. The technical expert establishes the factual foundation—what the patent covers, how it contributes to value, what alternatives existed—while the economic expert translates these findings into monetary terms.78

This collaboration requires clear communication and consistent assumptions. Technical opinions that cannot be translated into economic impact may be of limited value in damages proceedings.79

Emerging Issues in Patent Damages

FRAND and Standard Essential Patents

Standard essential patents (SEPs) subject to FRAND (fair, reasonable, and non-discriminatory) licensing commitments raise particular damages issues.80 UK courts have addressed FRAND licensing terms in cases including Unwired Planet International Ltd v Huawei Technologies 2020 UKSC 37, establishing that UK courts can determine global FRAND rates.81

The intersection of FRAND obligations and damages calculations remains an evolving area, with implications for technology licensing across telecommunications, computing, and other standards-intensive industries.82

The Unified Patent Court

The Unified Patent Court (UPC), operational since June 2023, introduces a pan-European option for patent enforcement with its own damages framework.83 Article 68 of the UPC Agreement provides for damages adequate to compensate for injury suffered, including lost profits and infringer's profits derived from infringement.84

Early UPC decisions suggest the court is developing its own approach to damages, informed by but not identical to national traditions including UK practice.85 A November 2025 UPC decision granted an injunction while creating exemptions for medical devices where they were the only available treatment, demonstrating the court's willingness to balance patent rights against public interest considerations.86

Increasing Emphasis on Expert Evidence Standards

Both UK and US courts are placing greater scrutiny on damages expert evidence.87 The 2025 US Federal Circuit en banc decision in EcoFactor v. Google emphasised that Daubert violations involving damages experts will typically result in trial reversal, reflecting stricter gatekeeping requirements.88

UK courts similarly expect rigorous methodology and clear explanation of how damages figures are derived from factual foundations.89

Critical Mistakes to Avoid

Based on our experience supporting patent damages proceedings, common mistakes include:

Overreaching on damages base: Claiming the entire market value without proper justification for why the patented feature drives customer demand.90

Inadequate apportionment: Failing to properly allocate value between patented and non-patented features in complex products.91

Ignoring non-infringing alternatives: Not addressing the availability of alternatives that would have constrained the hypothetical negotiation.92

Insufficient documentation: Lacking contemporaneous records to support claimed losses or establish costs in account of profits.93

Delayed election: Not properly evaluating the choice between damages and account of profits based on available evidence.94

Conclusion

Patent damages in the UK operate within a framework that balances compensation for patent holders with proportionality and fairness to defendants. The election between damages and account of profits provides flexibility to pursue the remedy best suited to particular circumstances, while the bifurcated procedural approach allows focused analysis of liability and quantum.

Technical experts play an essential role in damages proceedings, providing the foundation for apportionment analysis, non-infringing alternatives assessment, and evaluation of the patented technology's commercial contribution. These technical findings inform the economic calculations that ultimately determine compensation amounts.

Whether you are a patent holder considering enforcement, a defendant facing infringement claims, or a business assessing litigation risk, understanding UK damages principles helps inform strategic decisions. The differences between UK and US approaches—particularly the availability of account of profits and the absence of enhanced damages—can significantly affect case outcomes and should be considered in any multi-jurisdictional strategy.

As damages methodologies continue to evolve through case law and the emerging Unified Patent Court jurisdiction, the need for rigorous technical evidence to support damages claims will only increase. Success in patent damages proceedings requires not just legal expertise but the technical foundation that enables courts to understand what the patent truly contributes to commercial value.

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[96] Gajarsa, Arthur J., William F. Lee, and A. Douglas Melamed, "Breaking the Georgia-Pacific Habit," NYU Law (2017).

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