Legal Definitions - post-expiration-sales theory

The post-expiration-sales theory is a legal principle used in patent law to calculate damages. It allows a patent holder to seek compensation for sales they lost *after* their patent officially expired. This claim is based on the argument that an infringer gained an unfair market advantage or "head start" by illegally selling the patented product or using the patented process *during* the patent's active period. This early market entry and establishment allowed the infringer to continue capturing sales even after the patent protection ended, thereby harming the original patent holder's ability to compete fairly in the post-patent market. This concept is also sometimes referred to as the accelerated-reentry theory.

• Example 1: Specialized Medical Device

  A small company, MedInnovate, holds a patent for a unique, minimally invasive surgical tool. A larger competitor, GlobalMed, begins manufacturing and selling a copy of this tool during the last four years of MedInnovate's patent term, infringing on their intellectual property. When MedInnovate's patent finally expires, GlobalMed continues to sell its version of the tool. MedInnovate could invoke the post-expiration-sales theory, arguing that GlobalMed's infringement allowed them to establish manufacturing processes, build a distribution network, and secure relationships with hospitals and surgeons *before* the patent expired. This "head start" meant that even after the patent ended, GlobalMed was already entrenched in the market, capturing sales that MedInnovate would have otherwise made as the sole legitimate provider during the patent term and then as a fair competitor afterward.

• Example 2: Advanced Industrial Coating

  ChemGuard develops and patents a groundbreaking industrial coating that significantly extends the lifespan of machinery in corrosive environments. A rival, DuraCoat, infringes by producing and selling a nearly identical coating for the final three years of ChemGuard's patent. During this period, DuraCoat aggressively markets its product, securing long-term supply contracts with several major manufacturing plants. After ChemGuard's patent expires, DuraCoat continues to fulfill these contracts and attract new clients. ChemGuard might argue that DuraCoat's infringement gave them an unfair "accelerated reentry" into the market. By illegally selling the coating during the patent term, DuraCoat built a strong customer base and reputation, preventing ChemGuard from fully capitalizing on the market for its now-public technology after the patent expired. ChemGuard would seek damages for the sales it lost *after* the patent expired due to DuraCoat's unfairly gained market position.

• Example 3: Innovative Software Feature

  A software startup, DataFlow Solutions, patents a unique algorithm that dramatically improves the efficiency of data compression for streaming video. A larger tech company, StreamFast Inc., incorporates this patented algorithm into its popular video streaming platform for the last two years of DataFlow Solutions' patent term. StreamFast heavily promotes the superior video quality and reduced bandwidth usage enabled by this feature, attracting millions of new subscribers. When DataFlow Solutions' patent expires, StreamFast continues to use the algorithm. DataFlow Solutions could argue that StreamFast's infringement allowed them to establish a dominant market position and a massive user base *before* the patent expired. This "head start" means that even though the algorithm is now publicly available, StreamFast already has a loyal customer base and brand recognition tied to that feature, making it extremely difficult for DataFlow Solutions to compete for those same customers in the post-expiration market. DataFlow Solutions would seek compensation for the sales it lost *after* the patent expired due to StreamFast's unfair advantage gained through infringement.