Patent Damages

Judge Bryson sitting by designation in EDTX denies summary judgment motion and motion to exclude defendants’ expert’s testimony on noninfringing alternatives for reasonable royalty

On August 10, 2012, in TQP Development, LLC v. Merrill Lynch & Co., Inc., Case No. 2:08-CV-471-WCB (E.D. Tex.), Judge William C. Bryson of the Federal Circuit, sitting by designation, considered plaintiff’s motion for partial summary judgment and motion to exclude opinions by the defendants’ damages expert on noninfringing alternatives.  The twist here is that the noninfringing alternatives were being offered on the issue of reasonable royalty damages; this was not a lost profits case.  Judge Bryson denied both motions and ruled that defendants’ expert could testify regarding the noninfringing alternatives, which the defendants’ expert contended would impact any hypothetical negotiation.  The technology at issue was cipher algorithms.


NDCA Allows Use of Nash Bargaining as “Check” on Royalty Rate; Rejects Use of EMVR Because Accused Products only “Capable” of Infringement

On March 29, 2012, in Mformation Techs., Inc. v. RIM, No. C 08-04990 JW (NDCA), Judge Ware ruled on motions to exclude expert testimony, including testimony from damages experts.  The case addresses two interesting damages issues:  1) use of the Nash bargaining solution in determining a reasonable royalty rate, and 2) the entire market value rule for accused products that are only “capable” of infringement, i.e., that do not always infringe.


EDTX Allows Defendant’s Damages Reduction Based on Foreign Sales But Disallows in Part Defendant’s Government Sales Reduction

On April 16, 2012, in PACT XPP Technologies, AG v. Xilinx, Inc., Case No. 2:07-CV-563-RSP (EDTX), Magistrate Judge Payne issued an order on PACT’s motion to exclude opinions of Xilinx damages expert Mary Woodford regarding non-U.S. sales and U.S. government sales.  Woodford opined that PACT’s damages base was too large because it impermissibly included sales of accused products that occurred outside the U.S. and included sales to the U.S. government.  PACT argued that Woodford’s opinions were not supportable and moved to exclude her proposed reductions in the damages base.


Oracle v. Google: NDCA Rejects Conclusions by Court-Appointed Damages Expert Because They Failed to Account for the Value of the IP in Suit

On April 10, 2012, in Oracle America, Inc. v. Google Inc., No. C-10-03561 WHA (NDCA), Judge Alsup issued an order on Daubert motions against the report and testimony of Court-appointed Rule 706 expert Dr. James Kearl.  As an initial matter, the opinion states that Kearl was appointed under Rule 706 to assist the jury in evaluating damages issues because (a) the damages aspect of the case is extremely complex, (b) the parties have extremely divergent views on damages, and (c) the sums at issue are vast.


EDTX Issues Pretrial Rulings on Reasonable Royalty and Lost Profits Damages

On May 5, 2011, Judge Charles Everingham IV of the Eastern District of Texas issued a two part opinion. In Part 1, the Court issued the following rulings related to damages: (1) carried in part and denied in part SAP’s (“defendant”) Motion to Exclude Expert Testimony; (2) granted Versata’s (“plaintiff”) Motion to Exclude Inadmissible Opinion of SAP’s Experts; and (3) denied Versata’s Motion to Strike Portions of the Rebuttal Expert Report. In Part 2 of the opinion, the Court ruled on Versata’s and SAP’s Motion in Limine to exclude testimony, evidence, or argument related to the addition of a new damages theory – lost profits.  Versata Software Inc. v. SAP America, Inc., 2:07-CV-153-CE (E.D. Tex., May 5, 2011).


NDTX Strikes One License and Allows Another; Finds Fault in Expert’s Use of Entire Market Value Rule

On June 10, 2011, Judge Reed O’Connor of the Northern District of Texas issued an opinion granting in part and denying in part Universal Lighting Technologies’ (“defendant”) Motion to Strike, Limit, or Exclude Certain Expert Testimony.  Lighting Ballast Control, LLC, v. Phillips Electronics North America Corp, Case No. 7:07-CV-29 (N.D. Tex., June 10, 2011). Defendant had moved to strike expert testimony and report on two grounds: 1) the expert proposed royalty rates for the patent-in-suit while relying on rates from two licenses most favorable to plaintiff; and 2) the expert improperly tests or “checks” the reasonableness of his selected royalty rates using the entire market value of the accused products.


Oracle v. Google: NDCA Judge Alsup Rejects Nash Bargaining Solution and Grants Google’s Motion to Exclude Oracle’s Expert’s Report and Testimony Advocating $1.4B to $6.1B in Damages

The battle between Oracle and Google, concerning patent and copyright infringement relating to features of Java and Android, is approaching an October trial date. Damages is a huge issue in the case—in fact, in an opinion issued by Judge Alsup on July 22, 2011, Oracle’s expert has submitted a report advocating that Google should pay Oracle somewhere between $1.4 and $6.1 billion in damages. See Oracle America, Inc. v. Google Inc., No. C 10-03561 WHA (N.D. Cal. July 22, 2011).

On May 21, 2011, Oracle served the expert report of Dr. Iain M. Cockburn, who is a professor of finance and economics at Boston University. Dr. Cockburn provided an opinion on damages using the Nash bargaining solution and other economic analysis. Nash bargaining is named for its creator, Dr. John Nash, a Nobel Prize winning mathematician at Princeton, who was the subject of an Oscar-winning movie entitled “A Beautiful Mind.” Nash proposed that two people bargaining over a unit of some good (e.g., money) will get nothing unless their portions total no more than the total of the good, e.g., the total amount of money. A Nash bargaining solution is a “Pareto efficient” solution to a bargaining problem. Pareto efficiency, named after an Italian economist, can be summarized as follows: if an initial allocation of a good among two or more individuals can be changed to make one individual better off without making another individual worse off is a Pareto improvement, and a Pareto efficient (or Pareto optimal) allocation is achieved when no further Pareto improvements can be made. (See Simply put, the Nash bargaining solution is the best possible result for both parties.


Delaware court rules on date of hypothetical negotiation and Daubert motion re damages expert’s reasonable royalty methodology

On April 13, 2011, Judge Robinson of the District of Delaware issued a six part opinion. Three of the six are directly relevant to damages.  Boston Scientific Corp. v. Cordis Corp., Civ. No. 10-315-SLR (D. Del. April 13, 2011).

First, the court denied the defendant Cordis’ argument that the date of the hypothetical negotiation for the case involving 2.25 mm Cypher stent should be in 1999 because Cordis manufactured other Cypher stents in the United States in 1999. The court held that infringement caused by the 2.25 mm Cypher stent was separate and distinct from infringement caused by the other Cypher stent because the evidence overwhelmingly indicated that the 2.25 mm Cypher stent was distinct from the Cypher stents previously marketed by Cordis. The court reasoned that two separate hypothetical negotiation dates were required because the sales of two different products caused two infringements beginning at different times.  See Applied Medical Resources Corp. v. U.S. Surgical Corp., 435 F.3d 1356, 1363-64 (Fed. Cir. 2006). Because the court held that the 2.25 mm Cypher was separate and distinct from the other Cypher stents and because both the parties did not dispute that the 2.25 mm Cypher stent was first sold in the United States in September 2009, the court held that “the date of first infringement must be September 2009 as a matter of law.”


Oracle seeks billions from Google in patent/copyright suit over Android software

In a case pending in the NDCA before Judge Alsup, Oracle America, Inc. v. Google, Inc., Case No. CV 10-03561 WHA, Oracle is accusing Google of infringing copyrights and patents in Google’s Android software.  Oracle’s IP claims stem from its acquisition of Sun Microsystems (now Oracle America) and IP related to Java software.


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.