## Facts

- Allen Archery, Inc. owned U.S. Patent No. 3,486,495 covering a compound bow.
- Browning Manufacturing Company (and related Browning entities) had a patent license relationship with Allen but failed to pay required royalties and was found to have infringed certain patent claims.
- After liability was resolved, the district court conducted an accounting to set patent damages based on a reasonable royalty.
- The district court awarded more than $1.6 million in reasonable royalty damages and awarded prejudgment interest for allowed periods, using compound interest.
- The district court excluded prejudgment interest for roughly three years during which the case was stayed pending related litigation; the stay was sought for case-management reasons and was not attributable solely to Allen’s delay.
- Allen appealed the exclusion of interest during the stay; Browning cross-appealed the royalty calculation and challenged prejudgment interest (including compounding).

## Issues

1. Whether the district court’s reasonable royalty methodology and resulting royalty base/rate were legally and factually supportable under 35 U.S.C. § 284.
2. Whether the district court abused its discretion by denying prejudgment interest for the period the case was stayed.
3. Whether awarding compound (rather than simple) prejudgment interest was permissible and within the district court’s discretion.

## Decision

- The Federal Circuit vacated in part, affirmed in part, and remanded.
- The court generally upheld the district court’s reasonable royalty framework but vacated discrete aspects of the calculation and remanded for recalculation consistent with the record and governing standards.
- The court held the district court erred by categorically excluding prejudgment interest for the stay period and remanded for recalculation that includes that period absent a specific equitable justification.
- The court affirmed the use of compound prejudgment interest as a permissible means of achieving full compensation.

## Legal Principles

- Under 35 U.S.C. § 284, patent damages must be adequate to compensate for infringement and cannot be less than a reasonable royalty; the royalty analysis must be evidence-based rather than speculative.
- Prejudgment interest is normally part of “complete compensation” in patent cases and is intended to account for the time value of money between infringement and judgment.
- A patentee’s business model (e.g., primarily licensing) does not, by itself, justify denying prejudgment interest; the deprivation arises from the infringer’s retention of money owed.
- Excluding prejudgment interest for a litigation stay requires a concrete equitable basis (such as patentee-caused, culpable delay); a stay sought for efficiency and not attributable solely to the patentee does not justify withholding interest.
- District courts have discretion to select the rate and form of prejudgment interest, and compound interest may be awarded when needed to avoid undercompensation.

## Conclusion

The Federal Circuit required recalculation of damages and prejudgment interest because prejudgment interest is ordinarily necessary for full compensation under § 284 and may not be denied for a stay absent specific equitable grounds; it also approved compound interest as within the trial court’s discretion to make the patentee whole.


Allen Archery, Inc. v. Browning Mfg. Co., 898 F.2d 787 (Fed. Cir. 1990)