NDCA denies summary judgment and Daubert motions on lost profits and reasonable royalty; allows patentee’s entire market value and comparable license theories
On July 18, 2013, Judge Seeborg of the Northern District of California issued an opinion in Interwoven, Inc. v. Vertical Computer Sys., Case No. CV 10-04645 RS (Doc. 191), in which the court denied Interwoven’s motion for summary judgment concerning lost profits and reasonable royalties, and denied Interwoven’s motion to exclude Vertical’s damages expert, Joseph Gemini.
NDCA denies motion to strike reports for inadequate apportionment in lost profits and reasonable royalty; allows testimony on disputed licenses and offer to license
On February 21, 2014, Judge Alsup of the Northern District of California issued an opinion in Plantronics, Inc. v. Aliph, Inc., Case No. C 09-01714 WHA, in which the court denied motions to strike defendant’s damages experts on lost profits (Matthew R. Lynde) and reasonable royalty (Brian Napper). The case was a competitor suit involving bluetooth headsets. The opinion has several interesting issues, but the most significant is the treatment of apportionment and lost profits. Judge Alsup, in effect, held that the Panduit test only requires proof of demand for the patented product, and thus the plaintiff need not prove demand for the patented feature, thus avoiding the entire market value rule.
NDCA denies summary judgment based in part on statutory presumption of damages
On February 3, 2014, Judge Seeborg of the Northern District of California issued an opinion in Interwoven, Inc. v. Vertical Computer Systems, Case No. CV 10-04645 RS, in which the court addressed Interwoven’s motion for summary judgment on the issue of damages. The court granted the motion in part, as to lost profits, but denied the motion for summary judgment based in part on the “statutory presumption of damages upon a finding of infringement ….” [Slip op. at 10.] Although the court observed that the evidence submitted by Vertical provided “some thin basis on which a reasonable royalty might be calculated” [id.] the court allowed Vertical to go forward on a reasonable royalty theory based also on its conclusion that the district court must award in an amount no less than a reasonable royalty.
NDGA rejects two-supplier market theory for lost profits
On January 6, 2014, Judge Duffey of the Northern District of Georgia issued an opinion in Hubbard/Downing, Inc. v. Kevin Heath Enters., Case No. 1:10-cv-1131-WSD (Doc. No. 97), in which the court addressed damages issues stemming from a contempt ruling. In earlier action, plaintiff accused defendants’ products (neck brace devices for high performance racing vehicles) of infringing plaintiff’s patent. The parties entered into a settlement agreement that required a Consent Order. Subsequently, plaintiff discovered new neck brace products marketed by defendants, and brought an action for contempt. The court ruled that the new product “is no more than colorably different than the [prior device that was found to infringe],” and that defendants “knowingly violated the [settlement] agreement and the Consent Order ….” [Slip op. at 8.]
WDVA addresses lost profits and EMVR
On September 10, 2013, Judge Jones of the Western District of Virginia issued an opinion in Electro-Mechanical Corp. v. Power Distribution Products, Inc., Case No. 1:11CV00071 (Doc. No. 292), addressing post-trial motions concerning lost profits and the entire market value rule (EMVR). The number of cases addressing EMVR in the lost profits context are relatively rare, in comparison to the frequency in reasonable royalty cases, making this case an interesting read. The court rejected defendant’s JMOL motion on procedural grounds, but granted defendant’s new trial motion on lost profits, agreeing with defendant that the jury’s damages award based on EMVR was not supported by the evidence.
NDCA finds EMVR unnecessary for lost profits; allows royalty based on entire revenue without EMVR
On May 15, 2013, Magistrate Judge Grewal of the Northern District of California issued an opinion in Brocade Communications Systems, Inc. v. A10 Networks, Inc., Case No. C 10-3428 PSG (Doc. No. 998), addressing a motion by A10 seeking to exclude evidence from Brocade’s damages expert (James Malackowski) in an upcoming retrial. A10 moved to strike Malackowski’s lost profits and reasonable royalty theories because Brocade failed to provide evidence sufficient to support an entire market value rule (EMVR) theory. The court denied the motion, finding Brocade’s patent damages evidence to be relevant to its damages theories.
NDILL certifies for appeal two lost profits issues relating to a foreign patent owner and its US subsidiary
On May 23, 2013, Chief Judge Holderman of the Northern District of Illinois issued an opinion in Fujitsu Ltd. v. Tellabs, Inc., Case No. 09-C-4530 (Doc. No. 1103), addressing a summary judgment motion by Tellabs on the issue of whether Fujitsu Ltd. could recover lost profits. Tellabs offered two grounds for summary judgment: “(1) Fujitsu Limited is not entitled to damages in the form of the lost profits because it sells no products in the United States and (2) Fujitsu Limited cannot claim the lost profits of its North American subsidiary and non-exclusive licensee, Fujitsu Network Communications, Inc.” Slip op. at 1.
WDWA allows lost profits market share evidence based on third party analyst reports; rejects 3X litigation multiplier for reasonable royalty
On March 11, 2013, the WDWA issued an opinion in Avocent Redmond Corp. v. Rose Electronics, Case No. C06-1711RSL (Doc. No. 874), addressing Belkin’s Daubert motion to exclude opinions by Avocent’s damages expert (William O. Kerr) concerning lost profits and reasonable royalty. The lost profits issue concerned Kerr’s use of third party market analyst reports to support his market share analysis. The reasonable royalty issue concerned his use of a 3X multiplier to upwardly adjust the royalty rate in an allegedly comparable settlement agreement. The court denied the lost profits motion, but granted the reasonable royalty motion.
Federal Circuit addresses damages issues and worldwide sales
On March 26, the Federal Circuit issued its opinion in Power Integrations v. Fairchild Semiconductor Int’l, Inc., No. 11-1218, addressing damages issues and worldwide sales. The case is linked here.