In the United States (U.S.), a patent owner is legally entitled to no less than a “reasonable royalty” from an entity that infringes said owner’s patent. If the patent owner has lost profits due to infringement, and if said lost profits are more than a reasonable royalty, then the patent owner is entitled to a royalty up to the amount of lost profits.

In frequent cases, a patent owner and a patent infringer will negotiate a mutually agreeable license such that the patent owner will give the patent infringer the legal right to make, user or sell the patented invention, and the patent infringer will compensate the patent owner with a reasonable royalty.

If they cannot come to agreement, the patent owner may sue the patent infringer in a U.S. federal court. Most of the cases that are filed are settled before the court reaches a decision. If the case does go to trial, however, then evidence will be presented related to validity of the patent, whether or not it was infringed, what is a “reasonable royalty” in the field of the patented invention and the amount of the patent owner’s lost profits. Evidence will be presented to establish if the alleged infringer “willfully” infringed the patent. If the court finds that the infringement was willful, then punitive damages may be assessed. Punitive damages may be up to three times actual damages.

35 U.S.C. 284

“Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less that a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d) of this title.

The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.

(Amended Nov. 29, 1999, Public Law 106-113, sec. 1000(a)(9), 113 Stat. 1501A-566 (S. 1948 sec. 4507(9)).)”

Source: http://en.wikipedia.org/wiki/Royalty_rate