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how do you judge what the cost of development was? it is a very manipulatable number - looking at what holywood movie studios do already tells me that this method can't possibly work due to many who would game the system.

Agreed, generally. I am not familiar with how the calculation is currently done for calculating the damages, and so am not sure if the latter is any easier. Most probably, tracking the cost of development would have to be made a legal requirement just like other things that companies need to track (for taxes, immigration, etc.)

Another complication comes from the number of patents involved in a single product. How to tell how much revenue maps to each patent?

On the other hand, this does capture the intent of the patent system well -- Encourage research and development investment while avoiding frivolous cases.

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