Patent Damages
8Sep/15Off

NDCA allows "real estate" approach (lines of code) for apportionment

Posted by Chris Marchese

The Northern District of California, in Finjan, Inc. v. Blue Coat Systems, Inc., Case No. 13-cv-03999-BLF (Judge Beth Labson Freeman) (July 14, 2015), ruled on a host of Daubert motions, including by both plaintiff and defendant to exclude the other side’s damages expert.  The court addressed several apportionment techniques, allowing some and rejecting others.

“Real estate approach” based on lines of software code (royalty base)

In what may be a first in a patent case, the court squarely addressed an apportionment technique relating to the royalty base that this author calls the “real estate approach,” finding it not inherently unreliable.  This technique has different flavors, e.g., the footprint of circuitry on an integrated circuit or the lines of software code.  Here, the question was how much respective “real estate” was occupied by the lines of code making up the accused feature versus the total lines of code in the accused product.  The court held that use by defendant’s expert, Julie Davis, of a percentage of source code directed to the accused feature was not unreliable and could be presented to the jury.  (Note, this issue has arisen in the trade secret context:  UniRAM Tech., Inc. v. Taiwan Semiconductor Mfg. Co., No. C 04-1268 VRW (N.D. Cal. April 17, 2008) (allowing defendant’s expert’s apportionment that the accused misappropriated trade secret constituted 25% of the chip).  It was also addressed in passing by the Federal Circuit in Lucent—see quoted language below.)