On February 3, 2014, Judge Seeborg of the Northern District of California issued an opinion in Interwoven, Inc. v. Vertical Computer Systems, Case No. CV 10-04645 RS, in which the court addressed Interwoven’s motion for summary judgment on the issue of damages. The court granted the motion in part, as to lost profits, but denied the motion for summary judgment based in part on the “statutory presumption of damages upon a finding of infringement ….” [Slip op. at 10.] Although the court observed that the evidence submitted by Vertical provided “some thin basis on which a reasonable royalty might be calculated” [id.] the court allowed Vertical to go forward on a reasonable royalty theory based also on its conclusion that the district court must award in an amount no less than a reasonable royalty.
On January 6, 2014, Judge Duffey of the Northern District of Georgia issued an opinion in Hubbard/Downing, Inc. v. Kevin Heath Enters., Case No. 1:10-cv-1131-WSD (Doc. No. 97), in which the court addressed damages issues stemming from a contempt ruling. In earlier action, plaintiff accused defendants’ products (neck brace devices for high performance racing vehicles) of infringing plaintiff’s patent. The parties entered into a settlement agreement that required a Consent Order. Subsequently, plaintiff discovered new neck brace products marketed by defendants, and brought an action for contempt. The court ruled that the new product “is no more than colorably different than the [prior device that was found to infringe],” and that defendants “knowingly violated the [settlement] agreement and the Consent Order ….” [Slip op. at 8.]
Please join me on January 22 for a webinar, “Drafting Patent Claims from a Litigator’s Perspective.” In this first-of-the-season patent-focused webinar hosted by Fish & Richardson, I will cover the importance of:
On November 14, 2013, Judge Schneider of the Eastern District of Texas issued an opinion in L.C. Eldridge Sales Co. v. Azen Mfg. PTE, Ltd., Case No. 6:11-CV-599 (Doc. No. 290), in which the court ruled on several issues including a motion to exclude opinions of plaintiff’s damages expert, Todd W. Schoettelkotte. The opinion is brief on this point, but is worth noting for the fact that an expert was allowed to testify on EMVR. The relevant portion states:
On November 25, 2013, Judge Davis of the Eastern District of Texas issued an opinion in TracBeam L.L.C. v. AT&T Inc., Case No. 6:11-CV-96 (Doc. No. 551), in which the court ruled on several issues including a motion to exclude opinions of TracBeam’s damages expert, Robert Mills. According to the court, the parties agreed that an appropriate royalty rate would be based on AT&T’s cost savings from using the patented technology compared to the best available non-infringing alternative. The issue centered around how to compute the cost savings. Mr. Mills opined that the cost savings to AT&T was the cost of building a new location network infrastructure at a price of $742M. AT&T claimed that Mr. Mills wrongly used the cost of AT&T’s entire location network rather than the cost savings based on the value of the patented methods. AT&T argued that the value of the invention could be assessed by taking “the difference in cost between the redundant system and the existing system.” Slip op. at 8.
On December 31, 2013, Judge Rakoff of the Southern District of New York issued a summary judgment opinion in Cognex Corp. v. Microscan Systems, Inc., 13 Civ. 2027 (JSR) (Doc. No. 142), in which the court ruled on an issue concerning failure to plead patent marking. According to the court, the plaintiffs’ complaint plead the date of actual notice but failed to plead compliance with the marking statue. The defendants moved for summary judgment that plaintiffs could not recover damages prior to actual notice.
On December 3, 2013, Judge Cote of the Southern District of New York issued a lengthy bench trial order in Astrazeneca AB v. Apotex Corp., 01 Civ. 9351 (DLC) (Doc. No. 240), addressing a number of damages issues. The only issue we address here involves the entire market value rule. In particular, the court commented on its applicability in pharma cases. It also cited language from Uniloc in which the Federal Circuit suggested that entire market value rule could be satisfied if the patented feature substantially created the value of the component parts. We quote in full because the language is interesting (slip op. at 82-84):
DUtah Uses Infringer’s Profits to Compute Royalty; Comments on Obligation to Award Reasonable Royalty
On December 9, 2013, Judge Stewart of the District of Utah issued an order in Aqua Shield, Inc. v. Interpool Cover Team, Case No. 2:09-CV-13 TS (Doc. No. 178), granting in part and denying in part plaintiff’s Rule 59 motion to alter judgment. The court held a bench trial on willfulness and damages and found that plaintiff was entitled to zero damages. Plaintiff moved for relief from that decision, and the court granted the plaintiff’s motion to award reasonable royalty damages, which it based on the defendants’ net profit margin from the infringing sales.
On December 11, 2013, Judge Rakoff in the Southern District of New York issued an order in Tomita Techs. USA, LLC v. Nintendo Co., Ltd., Case No. 11 Civ 4256 addressing ongoing royalties. After a jury verdict of infringement and $30,200,000 in damages, the district court halved the award on remittitur, which Tomita accepted. This order related to the only remaining issue, ongoing royalties. Nintendo argued that the ongoing royalty be the (remitted) royalty rate, expressed as a percentage of sales, or 1.36%. Tomita argued that the rate should be double the (remitted) royalty rate, expressed as a dollar figure, or $4.45 per unit. Thus, ironically, it was the defendant that was requesting the rate be based on a percentage of the product.
This Wednesday, December 4, 2013, we will be presenting via the web on The Continuing Evolution of Patent Damages: What You Don’t Know May Hurt You. This is the next webinar in Fish & Richardson’s INSIGHTS webinar series.
Despite congressional and judicial efforts aimed at reining in patent damages, the law still lacks clarity in many areas. As the courts impose new legal restraints, clever litigants hatch novel damages theories in an effort to skirt those restraints. Today, the world of patent damages continues to evolve: solve one problem (such as the entire market value rule in reasonable royalty cases), and new issues pop up around it. You may feel damages is like a game where you overcome one hurdle, only to have another jump up out of nowhere.