Patent Damages

WDPA allows “novel” damages theory for per-unit royalty on units sold outside US because of “but for” usage inside US

Judge Fischer in the Middle District of Pennsylvania, in Carnegie Mellon University v Marvell Technology Group, Ltd. (M.D. Pa. November 29, 2012), denied an “emergency” motion to strike CMU’s damages theory on the eve of trial.  The Court denied the motion on multiple grounds, both procedurally (finding that it was in essence a motion for reconsideration of a previous order), and substantively (applying the same logic from the previous summary judgment motion that was denied).

At the heart of the dispute, both in the emergency motion and the prior summary judgment motion was an admittedly novel damages theory attempting to touch on foreign sales based on usage in the United States prior to export:

As previously discussed in prior briefings and opinions, CMU intends to prove that Marvell produces read channel chips that perform the patented method when used and ultimately sold through an extensive sales cycle. (Docket Nos. 441, 665).3 This sales cycle involves alleged infringement when Marvell’s chips are used in the United States to secure a “design win”, i.e. when a customer decides to use Marvell’s design for chips the customer will purchase. (Docket Nos. 441, 665). CMU proffers that this sales cycle is the “but for cause”4 of Marvell’s sales of Accused Chips, of which a subset is used within the United States. (Id.) CMU seeks damages, as calculated by a reasonable royalty, for Marvell’s alleged infringement throughout this sales cycle. (Id.)

The Court noted that that there was nothing directly on point, and that CMU’s theory, albeit novel, was sufficiently supported to be admissible at trial.  The Court also noted that “one of the simplest ways to determine the value of an infringing use of a patented method during research is to ascertain how many sales were made based on that infringing use” and that sales arising only because of infringement (i.e., use during the sales cycle) was a reasonable proxy.  The Court went out of its way to state that, by denying the motion, it was not endorsing the damages methodology, but merely holding it could go before a jury and be subject to vigorous cross-examination.

Finally, it should be noted that several weeks later, the jury in this case returned a verdict for over $1B, so undoubtedly there will be post-trial motions (and perhaps appeals) further vetting this theory and the various sub-issues.

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