Patent Damages

Webinar Replay | Patent Damages Theories

Damages are one of the most important aspects of any patent infringement case. For patent owners, the potential damages they may be able to recover are a primary consideration when deciding whether to pursue an infringement claim and even take the claim to trial.  For defendants, the amount of damages sought by the patent owner can present a major risk of loss, and will often shape the defense of the case. But proving damages is complex, and the law surrounding patent damages is continually changing, posing significant challenges for litigants when developing damages theories.  Additionally, district courts continue to carefully scrutinize damages theories through the Daubert process and motions in limine.

In this webinar, Fish attorneys Chris Marchese and Nicole Williams discuss two of the most important areas in patent damages law:

  • Apportionment
  • Marking post-Arctic Cat Inc. v. Bombardier Recreational Prods. Inc.

Click the link to download a copy of the webinar slides.

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California Law on Reverse Payment Settlements Goes into Effect

January 1, 2020, was the effective date of California’s new “Preserving Access to Affordable Drugs” Act, A.B. 824, now Sections 13,400-13402 California Health and Safety Code. The California Legislative Counsel’s digest summarizes the law’s main provision as follows:

This bill would provide that an agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a pharmaceutical product, is to be presumed to have anticompetitive effects if a nonreference drug filer receives anything of value, as defined, from another company asserting patent infringement and if the nonreference drug filer agrees to limit or forego research, development, manufacturing, marketing, or sales of the nonreference drug filer’s product for any period of time, as specified.

The bill only applies to California’s antitrust law, the Cartwright Act, and its Unfair Competition statute, California Business and Professions Code Section 17,200 et seq. The law has no effect on federal law or other states’ laws. Further, the bill only impacts the initial burden of going forward on whether a contract is a reasonable restraint on trade. The bill does not change the law on standing, antitrust injury or antitrust damages or equitable relief, nor does it likewise extend to all elements needed to prove liability under Section 17,200. So while the law shifts the burden of going forward in a “reverse payment” settlement from the plaintiff to the contracting parties (presumably the defendants) on the issue of whether the contract is a reasonable restraint on trade, it does not shift the plaintiff’s burden of going forward on the other elements of its claim. Moreover, since the bill only impacts only part of the proof of liability, it does not appear to shift the ultimate burden of proof away from the plaintiff (albeit how court’s deal with the statute in litigation is as yet unknown).

 A non-profit industry group, the Association for Accessible Medicines, filed suit against the state to declare the law unconstitutional and to enjoin it from going into effect. The Plaintiff argued, among other things, that the law violated the federal government’s right to regulate interstate commerce and the scope of U.S. patents. On December 31, 2019, the United States District Court for the Eastern District of California refused to enter a preliminary injunction against the law going into effect, holding the Plaintiff had not met its burden of proof for a preliminary injunction. Association for Accessible Medicines v. Becerra, 2019 WL 7370421 (E.D.Cal. 12/31/2019). Moreover, since the injunction was sought prior to when the law went into effect, there was uncertainty as to whether it would violate federal law “as applied”, which further complicated the injunction litigation.

How the Ninth Circuit will handle the issue, and whether courts will limit the law’s application to try to avoid conflict with federal law, remains to be seen. In the interim, given the size and reach of the California economy, settlements and licenses should be vetted by antitrust counsel in light of the AB 824.

Author: DJ Healey

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DNJ finds award of lost profits does not preclude injunction

In Eagle View Tech., Inc. v. Xactware Solutions, Inc., Civil No. 1:15-cv-07025 (D.N.J. Oct. 18, 2019), Judge Renee Marie Bumb granted Eagle View’s motion for a permanent injunction.  Addressing an issue related to damages, the court reasoned that an award of lost profits at the trial stage—which is for past damages—does not establish that the plaintiff has an adequate remedy at law, and thereby does not preclude injunctive relief. We quote the court’s analysis (slip op. at 22-26):


DDE excludes damages approach due to lack of comparability

In TC Tech. LLC v. Sprint Corp., Civil Action No. 1:16-cv-00153-RGA (D. Del. Oct. 18, 2019), Judge Richard Andrews granted Sprint’s motion to exclude TC Tech’s damages expert, Mr. Brett Reed, from testifying as to a damages “approach” based on Sprint’s internal documentation.  In particular, Mr. Reed opined that “Sprint had internally considered [a 5% royalty rate to be] reasonable for telecommunications patents, including the VoIP patents, and determined how that figure would relate to Sprint’s LTE-related service revenue.”  Slip op. at 4.  Sprint contended that this opinion should be excluded because Mr. Reed had “failed to establish the required comparability between Sprint’s VoIP-related demands and the hypothetical negotiation.”  Id.  The court agreed. 


D. Neb. denies JMOL, finds delay in filing suit irrelevant to damages

In Exmark Mfg. Co. v. Briggs & Stratton Corp., Case No. 8:10CV187 (D. Neb. April 15, 2019), Judge Joseph F. Bataillon denied Briggs’ JMOL motion or in the alternative for new trial or remittitur. These were post-trial motions after a retrial on damages, in which the jury awarded damages to Exmark, which occurred after remand from the Federal Circuit—the appellate court had affirmed in part and reversed in part and remanded the case to the district court to retry damages. Exmark Mfg. Co. v. Briggs & Stratton, 879 F.3d 1332, 1348-54 (Fed. Cir. 2018). The Federal Circuit found error in the court’s denial of Briggs’ motion for new trial and remanded for a new trial on damages. According to the district court’s order addressed here, the Federal Circuit “found no error in the Court’s allowing Exmark to apportion the value of the patented improvement and conventional components of the multi-component product through the royalty base [sic, rate] rather than the royalty rate [sic, base] and approved Exmark’s use of the accused lawn mower sales to as the royalty base. Id. at 1348-49.” Slip op. at 1. The district court further observed that the Federal Circuit “found Exmark’s damages expert Melissa Bennis’s opinion was inadmissible ‘as it failed to adequately tie the expert’s proposed reasonable royalty rate to the facts of the case,’ stating that the expert ‘plucked the 5% royalty rate out of nowhere.’ Id. at 1350-51.” Slip op. at 1-2.


EDTX denies motion to exclude expert’s patent valuation opinion

In Intellectual Ventures II v. Sprint Spectrum, Case No. 2:17-cv-00662-JRG-RSP (E.D. Tex. April 11, 2019), Judge Roy Payne denied defendants’ motion to exclude patent valuation opinions by Dr. Douglas A. Chrissan. Defendants argued that Dr. Chrissan was not sufficiently qualified to perform patent valuation “as he does not have any ‘experience with patent valuation whatsoever.’” Slip op. at 1. The basis for the denial was because Dr. Chrissan had served in a similar role in another case between some of the same parties; defendants had raised the same challenge there as they did in this motion; and the court had concluded that Dr. Chrissan was “sufficiently qualified in the [other] case to perform an analysis that is very similar to the analysis conducted here.” Id. The court noted that, because of his earlier experience in the other case, “Chrissan has even more experience than he did before.” Id. at 2. 


DMN denies JMOL to apportion various features; upholds lost profits; grants injunction; awards PJI at prime rate

In Solutran, Inc. v. U.S. Bancorp and Elavon, Inc., Case No. 13-cv-02637 (SRN/BRT) (D. Minn. Dec. 11, 2018), Judge Susan Richard Nelson ruled on post-trial motions including a JMOL motion by defendant U.S. Bank relating to reasonable royalty and lost profits damages.  The jury had awarded a hybrid damages verdict of $1.29M in lost profits and $1.98M in reasonable royalty, for a total award of $3.27M.  The court denied the JMOL motion.  The court also granted Solutran’s motion for an injunction and for post-2017 damages as well as post-judgment interest in full and pre-judgment interest in part. 


D. Del. grants a new (third) trial on damages and denies enhanced damages (before a finding of willfulness)

In the District of Delaware, Judge Leonard P. Stark presiding, in Greatbatch LTD. v. AVX Corporation,[1] case no. 13-723-LPS (March 30, 2018), granted defendants’ motion to set aside the damages verdict and ordered a new trial on damages, in part because the lump sum award could not be adjusted in light of the second jury’s verdict of noninfringement of certain claims.  The Court also denied plaintiff’s request for enhanced damages for willfulness because the Read factors weighed against enhancement.  Because the Court had already been through two trials and seen all the evidence, it made the decision on enhancement prior to a jury finding of willfulness.   


E.D. Tex. Denies Motion to Exclude Damages Testimony of Non-Infringing Alternatives in Expert’s Reasonable Royalty Calculation

In the Eastern District of Texas, Judge Roy S. Payne presiding, in Salazar v. HTC Corporation, 2:16-CV-01096-JRG-RSP (E.D. Tex. Mar. 28, 2018) the court denied Mr. Salazar’s motion to exclude HTC’s damages expert’s opinions related to non-infringing alternatives because the expert’s opinion relates only to a reasonable-royalty calculation, which does not require assessment of non-infringing alternatives, and even if it did, Salazar lacked evidence that the products in question were not acceptable non-infringing alternatives. 


S.D. Fla. Excludes evidence of pre-litigation negotiations and allows evidence of prior litigations and hypothetical negotiations

The Southern District of Florida, Judge Kevin Michael Moore presiding, in Prisua Engineering Corp v. Samsung Electronics Co., Ltd., Civil Action 16-cv-21761-KMM (S.D. Fla. Feb. 13, 2017), issued a pre-trial order regarding reasonable royalty rate evidence: (i) excluding evidence of a licensing fee to the extent it was obtained from pre-litigation negotiations; (ii)  excluding evidence of Samsung’s net worth; and (iii) allowing evidence of Samsung’s prior litigation as a basis for calculating a reasonable royalty.  The Court also denied the parties’ Daubert motions:  holding (i) Priusa’s expert’s consideration of pre-suit licensing negotiations was proper; (ii) Priusa’s challenge to “post-hypothetical evidence” went to weight not admissibility; and (iii) Samsung’s expert’s consideration of lump-sum licensing agreements was proper even though Prisua was not seeking a lump sum.