Patent Damages
26Aug/10Off

Wordtech Systems, Inc v. Integrated Networks Solutions, Inc. Wordtech Systems, Inc v. Integrated Networks Solutions, Inc., — F.3d —-, 2010 WL 2384958, C.A.Fed. (Cal.) 2010.

The Federal Circuit reversed the damages award, finding it to be against the clear weight of the evidence.  The Court found that defendants had waived their JMOL argument on damages, but had properly preserved a New Trial argument.  The plaintiff had requested “at least 12 percent” for a royalty, which came out to $114,000, but the jury awarded $250,000.  Wordtech did not present expert testimony, but instead used its President to discuss previous licenses it had entered into.

The Court held that, similar to Lucent and ResQNet, the licenses were not sufficiently comparable to the hypothetical negotiation license.  Although there were two previous lump-sum agreements in evidence, one for $175,000 and one for $350,000, the Federal Circuit noted that these licenses were not discussed in the trial, and thus “provide no basis for comparison with INSC's infringing sales. Neither license describes how the parties calculated each lump sum, the licensees' intended products, or how many products each licensee expected to produce.”

The running royalty licenses similarly could not support the jury verdict, because there was little if any explanation of how the rates in those licenses (around 5%) could support what amounted to a 26.3% license for the hypothetical negotiation.  Additionally, the royalty base was admittedly speculative, and the Court found that the means to calculate both the sales volume and profit margin constituted impermissible “speculation and guesswork.”

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