Patent Damages
30Dec/16Off

EDTX denies exclusion of settlement license and “real estate” apportionment

Posted by Chris Marchese

The Eastern District of Texas, in ZiiLabs, Inc. v. Samsung Electronics Co., (Judge Roy S. Payne) (December 4, 2015), granted in part and denied in part defendant’s motion to exclude various opinions from plaintiff’s damages expert, Robert Mills.

Grounds:

  • Defendant sought to exclude expert’s reliance on litigation settlement license covering 100 patents as not economically comparable and not the most reliable license in the record.
  • Defendants sought to exclude expert’s reliance on licensing negotiations that never resulted in executed licenses, and were not technically comparable.
  • Defendant sought to exclude apportionment based on surface area of accused element on the chip.
  • Defendants sought to exclude expert’s testimony on several economic theories

Outcome: Defendant’s motion was granted-in-part as to all references to unconsummated license agreements and denied as to the remainder

Analysis:

  • Litigation settlement license (Denied)

The court declined to exclude the Plaintiff’s expert’s (damages expert) opinion based on a license between the Samsung and a third party (MicroUnity) that covered 100 U.S. and foreign patents, and arose out of a litigation settlement. Slip op. at 3. The expert calculated his effective royalty rate based on the value of 10 of the patents in the license, justifying this by stating that in certain patent groups, 10% of the patents account for 81% to 93% of the value of the portfolio. Id. at 3–4. The expert also selected a license period based on the expiration dates of most of the patents, and a second license period based on the expiration of the last patent in the portfolio. Id. at 4. The court allowed these opinions because they were testable and supported by publications, or, in the case of the licensing periods could be challenged on cross-examination. Id. at 5.

The court rejected defendant’s arguments that the MicroUnity license was not economically or technically comparable. Regarding economic comparability, the court stated that, while LaserDyanmics, Inc. v. Quanta Comput., Inc., discouraged relying on litigation settlements, if there were no more reliable licenses in the record, they could be used. 694 F.3d 51, 77 (Fed. Cir. 2012); Slip op. at 5. The court found the license agreement proposed by defendants was not “more reliable” because it was also a settlement agreement, and thus declined to exclude the expert’s testimony on the MicroUnity agreement. Slip op. at 6–7.  Regarding technical comparability, the court found the damages expert’s reliance on the technical expert’s opinion was proper and sufficient to establish technical comparability. Id. at 7.

  • Unconsummated license negotiations (Granted)

The court granted Samsung’s motion with regard to four licensing negotiations between Apple and Samsung that were never executed. Slip op. at 8. The court agreed that Plaintiff had not shown how the negotiations were factually analogous to the hypothetical negotiation, because Apple and Samsung were direct competitors, whereas Plaintiff and Defendant were not. Id. at 8–9.

  • Surface area apportionment (Denied)

The expert analyzed the surface area that the Graphics Processing Unit (GPU) covered of the System-on-Chip (Soc), stating that the area of an SoC will be budgeted to various components based on the value of the component. Id. at 9–10. He used this value to qualitatively analyze the profit that should be credited to the invention, and then used it to adjust the royalty rate for the asserted patent upward. Id. at 10. He did not appear to use the surface area analysis as the royalty base. Id. at 10.  The court declined to exclude the expert’s opinion because he explained his method, and the defendant could challenge it on cross-examination. Id.

  • Various economic theories (Denied)

The expert also used 3 economic theories in his hypothetical negotiation analysis: 1) “settlement discounts” based on litigation uncertainty; 2) that a significant majority of the value of a patent portfolio is concentrated in a small subset of the patents in the portfolio; and 3) a survey discussion of running and lump-sum royalties. Id. at 11. The court allowed each of these because the expert tied the discussion of each theory to the facts and evidence of the case. See id. at 11.

 

///

 

Fields to the side (on the right):

 

Date:     12/04/2015

Court: E.D. Tex.

Judge:  Roy S. Payne

Area of Law:  Patent Law, reasonable royalty, apportionment, hypothetical negotiation, real estate apportionment, surface area apportionment

Expert’s name: Robert Mills

Area of Expertise, Technology or Science: Economics Expert, Damages Expert

 

6Oct/16Off

EDTX denies exclusion of settlement license and “real estate” apportionment

Posted by Chris Marchese

The Eastern District of Texas, in ZiiLabs, Inc. v. Samsung Electronics Co., (Judge Roy S. Payne) (December 4, 2015), granted in part and denied in part defendant’s motion to exclude various opinions from plaintiff’s damages expert, Robert Mills.

4Apr/16Off

EDTX denies Daubert motion re plaintiff’s apportionment and analytical approaches

Posted by Chris Marchese

The Eastern District of Texas, in Metaswitch Networks Ltd. v. Genband US LLC, Case No. 2:14-cv-00744 (Judge Payne) (March 5, 2016), addressed defendant Genband's Daubert motion seeking to strike plaintiff's expert Mr. Sims’ opinions relating to apportionment, royalty base calculation, and the application of the "analytical approach."  The court concluded that Mr. Sims' opinions were reliable under FRE 702 and thus, denied Genband's Daubert motion.

 

1Mar/16Off

District of Delaware allows damages experts to rely on distributor agreements, cross licenses and collaboration agreements as relevant comparable agreements

The District of Delaware, in Amgen Inc. et al. v. Sanofi, et al., 14-1317 (Judge Robinson) (February 18, 2016), considered the parties’ respective Daubert motions relating to the damages experts.  Both experts agreed that there were no comparable bare license agreements.  (slip op. at 5).  In an effort to base their opinions on “some modicum of real world data,” Plaintiff’s expert relied on distributor fees as comparable, while Defendant’s expert relied on cross-license agreements and collaboration agreements as comparable.  (Id.)  The Court determined that both experts “adequately explained in their reports the relevance of their respective data vis a vis the various Georgia-Pacific factors.”  (Id.) The Court, however, excluded from Defendant’s expert’s report an acquisition agreement and a settlement agreement because they were “business arrangements . . . too far afield from a bare patent license to be relevant comparables.” (Id.)

29Apr/14Off

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

Posted by Chris Marchese

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.

7Apr/14Off

WDPA orders ongoing royalties

Posted by Justin Barnes

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.

15Jan/14Off

EDTX allows cost savings approach for royalties, based on cost of entire location network

Posted by Chris Marchese

On November 25, 2013, Judge Davis of the Eastern District of Texas issued an opinion in TracBeam L.L.C. v. AT&T Inc., Case No. 6:11-CV-96 (Doc. No. 551), in which the court ruled on several issues including a motion to exclude opinions of TracBeam’s damages expert, Robert Mills.  According to the court, the parties agreed that an appropriate royalty rate would be based on AT&T’s cost savings from using the patented technology compared to the best available non-infringing alternative.  The issue centered around how to compute the cost savings.  Mr. Mills opined that the cost savings to AT&T was the cost of building a new location network infrastructure at a price of $742M.  AT&T claimed that Mr. Mills wrongly used the cost of AT&T’s entire location network rather than the cost savings based on the value of the patented methods.  AT&T argued that the value of the invention could be assessed by taking “the difference in cost between the redundant system and the existing system.”  Slip op. at 8.

1Aug/13Off

NDCA finds violation of FRAND for seeking ITC exclusion order

Posted by Justin Barnes

On May 20, Judge Whyte in the Northern District of California issued his second FRAND-related opinion of the month, this time in Realtek Semiconductor Corp. v. LSI Corp., Case No. 5:12-cv-03451.  According to the Court

This dispute concerns whether a holder of patents essential to an industry standard ("standard-essential patents") may commence an action before the U.S. International Trade Commission ("ITC") pursuant to Section 337 of the Tariff Act of 1930 ("Section 337 action") seeking an exclusion order and injunctive relief against a party practicing that standard without violating its obligation to license the standard-essential patents on reasonable and non-discriminatory ("RAND") terms.

Realtek had moved for summary judgment that LSI and Agere had breached their FRAND obligations by failing to offer a license on reasonable terms prior to seeking an exclusion order from the ITC.  Realtek also moved for an order barring LSI and Agere from enforcing or seeking to enforce an exclusion order.  The patents at issue related to 802.11 wireless standards, and Agere had agreed to license its 802.11-related patents on FRAND terms.

31Jul/13Off

NDCA sets FRAND rates for Rambus’ SDRAM patents as sanction

Posted by Justin Barnes

On May 9, Judge Whyte in the Northern District of California issued an order in SK Hynix Inc. v. Rambus Inc., the latest opinion in an ongoing patent saga that has lasted a decade.  Of interest to patent damages in Judge Whyte’s order was his setting of a FRAND rate as a sanction against Rambus for spoliation.  Put differently, the sanction Judge Whyte determined was most appropriate for the spoliation was to strike any damages above and beyond a “reasonable and non-discriminatory royalty.”  The rationale for this was to ensure that SK Hynix would not be “put at a competitive disadvantage in the marketplace.”

29Jul/13Off

WDWA sets FRAND rates for 802.11 networking and H.264 video

Posted by Justin Barnes

On April 25, 2013, Judge Robart of the Western District of Washington issued a 200+ page findings of fact and conclusions of law in Microsoft Corp. v. Motorola Mobility, Inc., Case No. 2:10-cv-01823 (Doc. No. 681), addressing a multitude of issues, but of particular interest, FRAND (fair, reasonable, and non-discriminatory) rates for patents relating to two well-known industry standards.  The standards at issue were the IEEE wireless local area network (“WLAN”) standard, 802.11, and the ITU advanced video coding standard, H.264.