Patent Damages

SDCA broadly construes comparable licenses and allows profit split/Nash bargaining

The SDCA in Gen-Probe Inc. v. Becton Dickinson & Co., Case No. 09-CV-2319 BEN NLS and 10-CV-0602 BEN NLS (S.D. Cal. November 26, 2012), ruled on Daubert motions by plaintiff Gen-Probe and defendant Becton Dickinson (“BD”) regarding damages issues.  The court denied both motions.


SDCA rules on Daubert motions related to both Lost Profits and Reasonable Royalty

In Area 55, Inc. v., Inc., Case No. 11-CV-00145-H-NLS, the Court issued an opinion on July 24, 2012 regarding pending Daubert motions relating to both lost profits and reasonable royalty.

The lost profits issue related to whether the Plaintiff’s expert had reached an appropriate conclusion regarding lack of acceptable non-infringing substitutes.  The Court noted that the Defendant was challenging the conclusion, not the methodology.  The argument was that there was insufficient basis to reach this conclusion, but the Plaintiff argued that there was sufficient basis, namely the expert’s discussions with the inventor.  The inventor had spoken to the expert about the various alternative products in the marketplace, and had explained why he (the inventor) believed each was inferior in comparison to the patented product.  The Court found no issue with this, noting “[a]n expert cannot be an expert in all fields, and it is reasonable to expect that experts will rely on the opinions of experts in other fields as background material for arriving at an opinion.”  Accordingly, the Court refused to exclude the testimony and invited the Defendant to vigorously cross-examine the expert on the issue of non-infringing substitutes.


SDCA Allows Discovery of License Agreements That Involve Many Patents Not Asserted in the Litigation

On December 10, 2010, Magistrate Judge (now District Judge) Battaglia of the Southern District of California issued an order compelling defendant Nokia to produce all licensing agreements covering wireless products that comply with 3G standards known as CDMA and WCDMA.  SPH America, LLC v. Acer, Inc., Civil No. 09cv2535 JAH (AJB) (S.D. Cal., Dec. 10, 2010).  In particular, SPH sought Nokia’s license agreements where it licensed its CDMA or WCDMA technology to others and all of its cross-licensing agreements concerning CDMA or WCDMA technology.  Apparently, the technology at issue was WCDMA.  SPH argued that these broad Nokia agreements contained at least two patents that implemented the WCDMA standards.  SPH contended that the license agreements were relevant because they

demonstrate rates paid by licensees for the use of patents comparable to SPH’s patents-in-suit (Georgia-Pacific factor 2); show customary rates in the industry for the use of analogous inventions (Georgia-Pacific factor 12); and show rates upon which a licensor and a licensee would have reasonably and voluntarily agreed (Georgia-Pacific factor 15). See Georgia-Pacific v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970) affs, 446 F.2d 295 (2nd Cir. 1971).  SPH argues that because the licenses covering CDMA and WCDMA technology  are relevant, there is little, if any, burden on Nokia to produce these agreements.


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

“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. 


NDIll addresses EMVR, apportionment, unpatented items in royalty base, and price erosion

On March 26, 2014, Judge St. Eve of the Northern District of Illinois issued a lengthy, detailed damages opinion in Sloan Valve Co. v. Zurn Industries, Inc., Case No. 10-cv-00204, in which defendant Zurn moved to exclude testimony of plaintiff’s damages expert, Richard Bero.  The court addressed several interesting damages issues, including entire market value rule, apportionment, inclusion of unpatented items in the royalty base, and price erosion.  The court granted Zurn’s motion.


CDCA compels production of IBM cross-licenses and outbound licenses

On August 3, 2012, in Richard C. Williamson v. Citrix Online, LLC, et al., CV 11-02409-AHM (JEMx) (C.D. Cal.), Magistrate Judge McDermott granted the plaintiff’s motion to compel defendant IBM to produce outbound licenses and cross-licenses incorporated into, or used in or with, the accused technology (web conferencing) in response to document requests and an interrogatory.  In an earlier ruling, the court denied plaintiff’s motion to compel, but had based its decision on cases cited by IBM for the first time in a supplemental memorandum to which plaintiff had not responded.  But the denial was without prejudice.  Plaintiff filed its own supplemental memorandum, responding to IBM’s supplement, and then IBM responded to plaintiff.  On further review, the court granted plaintiff’s motion to compel.