Patent Damages

Damages base – is the name of the game the claim?

Posted by Chris Marchese

“The name of the game is the claim.”  Chief Judge Rich wrote those words back in 1990.  Giles S. Rich, The Extent of the Protection and Interpretation of Claims--American Perspectives, 21 Int'l Rev. Indus. Prop. & Copyright L., 497, 499 (1990) ("To coin a phrase, the name of the game is the claim.").  That statement has typically been invoked in the context of claim construction.  However, in the ever-changing landscape of patent damages law, it seems to have growing force and effect. 


EDTX allows expert to convert lump sum licenses to per unit royalties

Posted by Chris Marchese

Judge Ron Clark of the Eastern District of Texas, in Affinity Labs of Texas, LLC v. Ford Motor Co., Civil Action No. 1-12-CV-580 (Aug. 22, 2014) (Doc. No. 200), denied a motion to exclude Ford’s damages expert, Julie L. Davis, from testifying about allegedly comparable license agreements.  Affinity’s issue was that the agreements were for lump sums, and that Ms. Davis had converted those payments into per unit royalties.  The opinion is brief, and the relevant portion is quoted:


SDFla excludes “end around” regarding EMVR

Posted by Justin Barnes

The Southern District of Florida, in Atlas IP, LLC v. Medtronic, Inc., Civil Action No. 13-CIV-23309 (Judge Cecilia Altonaga) (Oct. 6, 2014), granted a motion to exclude testimony from Atlas’ damages expert Donald Merino.  First, Medtronic alleged that Merino’s royalty base was “inflated and unreliable because it is derived from the entire market value of Medtronic end products, instead of the smallest salable patent-practicing unit.”  The Court held that “while undoubtedly the end product derives value from the allegedly infringing technology, Medtronic buys a chip from third parties, and the chip includes the allegedly infringing technology.”  Because of that, the chip was the SSPPU.  But rather than start an apportionment analysis with the chip, Merino started with the end product, and apportioned from there.  Atlas argued that this was permissible under the Rembrandt v Facebook decision, but the Court disagreed.  Instead, the Court held that starting with a base larger than the SSPPU and then apportioning down was simply “form over substance,” and rejected Merino’s approach based on “his improper use of the EMVR.”


NDCA allows discovery of settlement agreement

Posted by Chris Marchese

Magistrate Judge Grewal of the Northern District of California, in Good Tech. Corp. v. AirWatch, LLC, Case No. 5-12-cv-05827 (Sept. 25, 2014), issued an order denying a motion for protective order.  There is not document associated with the entry, just a text only entry from the court, which is quoted in full:   


Reputation of defendant and its products not relevant to analytical method

Posted by Chris Marchese

The Eastern District of Michigan, in Linear Group Services, LLC v. Attica Automation, Inc., Case No. 13-10108 (Judge Gershwin A. Drain) (Aug. 25, 2014), addressed several motions in limine. One of the issues involved evidence related to the analytical method for computing reasonable royalty damages. The opinion is brief, and so we quote in full (slip op. at 7-8):


EDTX rejects arguments that expert should have included sunk costs and did not apportion

Posted by Chris Marchese

The Eastern District of Texas, in Affinity Labs of Texas, LLC v. Ford Motor Co., Civil Action No. 1-12-CV-580 (Judge Ron Clark) (Aug. 22, 2013) (Doc. No. 201), denied a motion to exclude testimony from expert Carl Degan.  Ford contended there were two deficiencies in Degan’s opinions:  (1) his failure to factor sunk engineering costs into his profitability analysis; and (2) his failure to apportion. 


EDTX refuses to exclude expert’s conversion of lump sum into per unit royalty

Posted by Chris Marchese

The Eastern District of Texas, in Affinity Labs of Texas, LLC v. Ford Motor Co., Civil Action No. 1-12-CV-580 (Judge Ron Clark) (Aug. 22, 2013) (Doc. No. 200), denied a motion to exclude testimony from damages expert Julie Davis in which she had converted lump sum royalties into per unit royalties.  The opinion is brief, and we quote the relevant portion in full:

Affinity next argues that Ms. Davis’s testimony regarding her conversion of a lump-sum license agreement into per-unit royalties was improper and requires exclusion. “[L]ump sum payments … should not support running royalty rates without testimony explaining how they apply to the facts of the case.” Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 30 (Fed. Cir. 2012). Ms. Davis provided a chart as part of her expert report detailing her conversion of the Apple lump-sum royalty to per-unit royalty. [Doc. # 141-5]. As to the Panasonic license, upon which Affinity itself relies, Ms. Davis did not rely upon it specifically to calculate a value, but rather generally states that it would lead to a “very modest running royalty rate.” Affinityalso argues that Ms. Davis’s analysis of Ford’s licenses with 911 Notify, LLC and Tendler Cellular of Texas, LLC is flawed. The calculation of a reasonable royalty is not an exact science, and just because one approach may be better does not make other approaches inadmissible. Apple Inc. v. Motorola, Inc., --- F.3d ---, 2014 WL 1646435, *19 (Fed. Cir. Apr. 25, 2014). The issues that Affinity raises regarding Ms. Davis’s calculations are a matter of weight for the jury to determine, rather than a matter of exclusion.


Allowing “Do-Overs” for damages experts

Posted by Chris Marchese

District courts have been wrestling with how to handle damages experts who are fully excluded by Daubert motion.  Courts have essentially three options:  (1) give no further bites at the apple and exclude the expert from trial; (2) give the expert one, and only one, more chance at an admissible theory of damages (one more bite at the apple); or (3) allow the expert to submit a supplemental or replacement report but put no express limitations on the number of times the expert can bite the apple.  The additional apple bites are sometimes referred to as “do-overs.”  This is a pejorative term in that is conjures a first failure, and then another chance to get it right.  Regardless, the term is apt for an expert whose report has been deemed unreliable and inadmissible and who is permitted to submit a supplemental or replacement report.


Judge Davis would make a good damages expert (CSIRO v Cisco)

Posted by Justin Barnes

On July 23, 2014, Judge Davis of the Eastern District of Texas issued findings of fact and conclusions of law regarding damages figures in CSIRO v Cisco, Case No. 6:11-cv-00343-LED.  Infringement and validity were stipulated, and the parties agreed to a bench trial on damages, which lasted four days.  CSIRO’s ‘069 patent related to IEEE 802.11 wireless standards (excluding 802.11b).

There was an allegation that CSIRO had made a RAND commitment to the IEEE regarding one of the 802.11 standards (802.11a), but Judge Davis put very little emphasis on this point, as CSIRO had volunteered to license the ‘069 patent anyway (even for 802.11 standards where there were no RAND commitments) and the number of accused products involving 802.11a was less than 0.1% of the total accused products.


NDCA addresses damages based on entire chip; royalty rate; estimates of importation

Posted by Chris Marchese

On June 20, 2014, Judge Gonzalez Rogers of the Northern District of California issued an opinion on defendant Freescale’s motion to exclude certain testimony of plaintiff’s damages expert, Catharine M. Lawton.  MediaTek, Inc. v. Freescale Semiconductor, Inc., Case No. 11-cv-5341 YGR.  Freescale moved on three issues:  “(1) [Lawton’s] apportionment analysis; (2) her royalty rate estimate for certain patents-in-suit; and (3) her opinion on the U.S. share of Kindle e-reader sales.”  Slip op. at 1.  The court denied the motion on each issue.