In les Nouvelles Article, Analysis Group Economists Discuss Prejudgment Interest Awards in Patent Infringement Cases

September 19, 2022

Analysis Group economists authored an article evaluating the appropriateness and proper measure of prejudgment interest in patent infringement cases. The motivation and foundation of the article is the decision by a federal judge in the US District Court for the Western District of Texas to award $162.3 million in prejudgment interest – in addition to $2.18 billion in damages awarded by a jury – to the plaintiff in VLSI Technology LLC v. Intel Corporation.

In their article, “Prejudgment Interest: W.D. Texas Got It Right In The VLSI v. Intel Patent Suit,” Analysis Group Managing Principal John C. Jarosz, Principal Robert L. Vigil, and Manager Joseph F. Maloney explained that, although the court provided only a limited description of its reasoning in VLSI, it appears to have arrived at largely the right conclusions as a matter of economics in its application and calculation of prejudgment interest in the case. The authors explained that prejudgment interest should be awarded in every case in which there are past damages, should be computed on a compound basis, and should be calculated using a rate that fairly compensates the injured party while properly accounting for risk. After examining the economic and legal rationales underlying awards and calculations of prejudgment interest and noting that “[p]rejudgment interest should adequately embody the risk/return tradeoff that every investor faces,” the authors conclude, “A damages award is not, after the fact, a risky investment. It is a known and awardable amount. As such, a risk-free rate should be used to bring past damages forward to today every time.”

The article was featured in the Licensing Executives Society International’s les Nouvelles quarterly publication.

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