Patent Damages

Recent Article Analyzes Data and Concludes Patent Damages Awards Are Not Excessive; Rejects Need for Damages Law Reform

Posted by Chris Marchese

Michael J. Mazzeo (Northwestern University, Kellogg School of Management), Jonathan Hillel (Skadden, Arps), Samantha Zyontz (Searle Civil Justice Institute) published an article on February 24, 2011 entitled:  “Are Patent Infringement Awards Excessive?  The Data Behind the Patent Reform Debate.”  The abstract to the article (which can be found at states:

In their arguments for patent reform, proponents have cited cases with very large damage award amounts as evidence of pervasive “excessive” damages. This paper uses economic value of patents as a benchmark for comparison to conduct a systematic empirical analysis of patent damage awards to get a more complete understanding of the scope of the potential problem of “excessive” damage awards. We build a dataset consisting of information about damage awards in a comprehensive list of 340 cases decided in US federal courts between 1995 and 2008, supplemented with information about the litigants, their lawsuits and the economic value of the patents-at-issue. Our findings demonstrate that the largest awards dominating the conversation come from isolated cases: damage awards in the largest eight cases represent over 47% of total damages in our database. We build an econometric model based on our supplementary data that explains nearly 75% of the variation in observed damage award amounts, suggesting the awards are highly predictable and correlated with economic value of patents. We argue that the empirical results do not establish an argument for substantial patent reform based on a pervasive problem with “excessive” damages.

The article can be downloaded at the URL provided above.


Federal Circuit overturns $1.67 billion patent verdict against Abbott Labs

Posted by Chris Marchese

The Federal Circuit wiped out the largest patent verdict in U.S. history in a case involving Abbott Lab’s Humira arthritis drug. (To see the case, click here.) A jury in the Eastern District of Texas had found Abbott infringed a patent held by Centocor Ortho Biotech, a subsidiary of Johnson & Johnson.  The Federal Circuit found the patent invalid for failure to satisfy the written description requirement, thereby eliminating the $1.67B verdict—which consisted of $1.17B in lost profits and a $504M reasonable royalty.  Another $176M in interest was later tacked on.

The huge verdict had supplanted a $1.52B verdict against Microsoft in the Lucent litigation.  Unlike the Abbott Labs case, the Microsoft verdict was overturned by the district judge (Judge Rudy Brewster of the Southern District of California) on post-trial motions.  The Federal Circuit affirmed Judge Brewster’s rulings.  Here, in contrast, the verdict was still intact when it reached the Federal Circuit, and the Federal Circuit found that trial judge erred in failing to find the patent invalid.


Senate to Consider Patent Reform Legislation

Posted by Chris Marchese

Back in early February, we posted on a new bill (S.23) introduced on January 25 by Senator Patrick Leahy, who is chairman of the Senate Judiciary Committee. The bill contains numerous modifications to the patent statute, including damages reform.  The damages reform is the same as that introduced by Senator Leahy last year in a Manager’s Amendment, including a procedural gatekeeping role for federal courts.

On February 28, the full Senate will begin debating the comprehensive patent legislation (S.23), including the damages reform.

For a comprehensive analysis of legislative damages reform, and for links to the Congressional patent reform bills, including the Manager’s Amendment, you can take a look at Fish & Richardson’s legislative reform web page that’s specific to patent damages: