The Southern District of Florida, in Arctic Cat Inc. v. Bombardier Recreational Products, Inc., Case No. 14-cv-62369 (Judge Bloom) (Jan. 3, 2017), awarded Plaintiff an ongoing royalty and pre-judgment interest.
In an earlier order, the Court determined that Plaintiff was entitled to an ongoing royalty based on Defendant’s concession that it is continuing to sell the infringing personal watercrafts and that the jury’s royalty rate of $102.54 per unit set the “floor” for the ongoing royalty rate. The Court ordered the parties to negotiate an ongoing royalty rate, but mediation was unsuccessful.
The District of Nebraska, in Prism Techs, LLC v. Sprint Spectrum, Case No. 8:12CV123 (Judge Lyle Strom) (December 18, 2015), granted Plaintiff Prism’s motion for pre- and post-judgment interest and denied its motion for an accounting and ongoing royalty.
On January 28, in Open Text S.A. v Box, Inc., Case No. 13-cv-04910-JD,Judge Donato of the NDCA denied a motion-in-limine that would have prevented Defendant Box from putting forth a fully paid-up, lump sum form of damages at trial. Plaintiff Open Text moved to prevent Box from arguing a fully paid-up lump sum covering the life of the patents, arguing that such an outcome “would preclude Open Text from seeking an injunction or post-verdict ongoing royalties.” The Court cited numerous cases holding that a fully paid-up lump sum award is an allowable form of damages.
On March 31, 2014, Judge Fischer of the Western District of Pennsylvania issued a 72-page opinion in Carnegie Mellon Univ. v. Marvell Tech. Group, Ltd., Case No. CV 09-290. The opinion covered a number of post-verdict damages issues, including pre-judgment and post-judgment interest, supplemental damages (for sales between the end of discovery and through trial), enhanced damages, and ongoing royalties. Of particular note are the enhanced damages and ongoing royalties issues.
On December 11, 2013, Judge Rakoff in the Southern District of New York issued an order in Tomita Techs. USA, LLC v. Nintendo Co., Ltd., Case No. 11 Civ 4256 addressing ongoing royalties. After a jury verdict of infringement and $30,200,000 in damages, the district court halved the award on remittitur, which Tomita accepted. This order related to the only remaining issue, ongoing royalties. Nintendo argued that the ongoing royalty be the (remitted) royalty rate, expressed as a percentage of sales, or 1.36%. Tomita argued that the rate should be double the (remitted) royalty rate, expressed as a dollar figure, or $4.45 per unit. Thus, ironically, it was the defendant that was requesting the rate be based on a percentage of the product.
EDTX considers post-trial motions re the intersection of patent misuse and damages, EMVR, and ongoing royalties
The Eastern District of Texas in Soverain Software LLC v. J.C. Penney Corp., Case No. 6:09-CV-274 (E.D. Tex., Aug. 9, 2012), issued an opinion that addresses the cross-section of patent misuse and damages, the entire market value rule for a patented on-line ordering system, and ongoing royalties. All three issues are interesting and worth consideration. In particular, the conclusion on EMVR seems flawed and will be a good issue for appeal. Similarly, there are substantive issues for appeal for the ongoing royalties analysis.
Beware NPEs – ITC says no to exclusion order for an NPE who obtained ongoing royalties in district court
On August 1, 2012, in Certain Video Displays and Products Using and Containing Same, Inv. No. 337-TA-828, Order No. 9, ITC ALJ Essex held that an ongoing royalty awarded in the EDTX precluded an NPE, Mondis Technology Ltd., from obtaining an exclusion order from the ITC. The EDTX had awarded post-verdict (or ongoing royalties) to Mondis against respondents Chimei Innolux Corp. and Innolux Corp. (“CMI”). CMI argued in the ITC that the ongoing royalties constituted a license. Mondis argued to the contrary, but Judge Essex rejected Mondis’ arguments.
On August 7, 2012, the Federal Circuit in WhitServe, LLC v. Computer Packages, Inc., Case No. 2011-1206, 1261 (Fed. Cir.), the court vacated the jury’s damages award and remanded for a new trial on damages. The case addresses many damages issues—reasonable royalty base, reasonable royalty rate, lump sum versus running royalty, the 25% rule, ongoing royalties, prejudment interest, and supplemental damages—but none of the rulings is surprising or ground breaking. The case is instructive, however, on how much care must be taken in presenting a coherent damages case. Plaintiff, WhitServe, and its damages expert, Shapiro, made mistakes at trial, and WhitServe’s desperate attempt on appeal to preserve the verdict (approximately $8M) simply could not overcome these mistakes.
On April 25, 2012, the Western District of Pennsylvania in University of Pittsburgh v. Varian Medical Systems, Inc., Case 2:08-cv-01307-AJS, addressed ongoing royalties in this hotly contested case that we have previously featured on this blog. The court concluded that the ongoing royalty rate should be the same as the jury’s rate because circumstances had not changed between the dates of the two hypothetical negotiations—the date used at trial and the post-verdict date.
EDTX Post-Trial Order on Multiple Issues: Ongoing Royalty Base and Payment of Ongoing Royalties; Supplemental Damages & Prejudgment Interest; Foreign Tax Laws; Extending Ongoing Royalties to Successors and Assigns; Stay of Supplemental Damages and Ongoing Royalties Pending Appeal
On April 30, 2012, in Mondis Tech. Ltd. v. Chimei InnoLux Corp., Civil Action No. 2:11-cv-378-JRG (EDTX), Judge Gilstrap issued a post-trial order on a number of damages issues: (a) the definition of the royalty base for ongoing royalties; (b) the timing and frequency of reports and payments; (c) whether prejudgment interest should be assessed on the supplemental damages; (d) whether a portion of the judgment must be withheld due to Taiwanese tax laws; (e) whether the ongoing royalties extend to Innolux’s successors and assigns; (f) whether Mondis is entitled to additional discovery related to a possible transfer of assets from Innolux to Hon Hai Precision Ltd. (which is not addressed in this summary); and (g) whether the supplemental damages award and the ongoing royalty award should be stayed pending appeal.