Patent Damages
1Dec/11Off

WD TN Grants New Trial on Damages after Remand Because the Reasonable Royalty Rate in the Original Verdict Was Based on the Now-Defunct 25%

After remand from the Federal Circuit, Judge McCalla of the Western District of Tennessee considered Medtronic’s motion for a new trial on damages because the earlier verdict was flawed because the plaintiff (SSI) based its reasonable royalty analysis on the 25% rule.  Spine Solutions, Inc. v. Medtronic Sofamor Danek, Inc., Case No. 2:07-02175-JPM-dkv (W.D. Tenn. Nov. 23, 2011).  The court granted the motion even though Medtronic had failed to object to the 25% rule at trial because, in the interim, the Federal Circuit handed down the Uniloc case, which found the 25% rule inapplicable as a matter of law and evidence based on it inadmissible.

SSI argued that the reasonable royalty rate from the original verdict (which was 18%) should remain in place because Medtronic acted unreasonably in failing to object before or during the trial to SSI’s reliance on the 25% rule.  The court observed that “[t]he key question, however, is whether the law was so well settled that any attempt to challenge it would have appeared futile, or ‘where existing law appear[ed] so clear as to foreclose any possibility of success.’”  (Quoting United States v. Washington, 12 F.3d 1128, 1139 (D.C. Cir. 1994).)  The court reasoned that the Federal Circuit had implicitly upheld the 25% rule in prior cases (i4i and ResQNet.com), and thus Medtronic “had no notice that an objection to its use would have been fruitful in light of the Federal Circuit’s previous treatment of the rule. The law does not speak in absolutes and recognizes that a litigant might not be aware of the necessity of making an objection at trial where the great weight of the case law suggests that an objection is not worth making.”  The court granted a new trial on damages.

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