Patent Damages

Nevada court imposes 3X post-judgment royalty in lieu of injunction

The District of Nevada, in Server Technology, Inc. v. American Power Conversion Corp., 3:06-CV-00698-LRH-VPC (Judge Larry R. Hicks) (March 31, 2015), denied plaintiff’s request for injunction but granted a post-judgment royalty of 15%, which was 3X the jury’s 5% royalty.  The section of the opinion is brief and is quoted nearly in full here:

The court has reviewed the documents and pleadings on file in this matter and finds that a compulsory license at a 15% royalty rate is an appropriate remedy in this action. First, the court notes that absent a compulsory license, STI will continue to suffer harm from the sale of the AP7900 and AP8900 products. Second, a 15% royalty rate, or three times the jury’s 5% reasonable royalty rate, on post-judgment sales is reasonable in this action. Because there is an inherent and fundamental difference between pre-verdict infringement—where the question of patent validity and infringement are questionable—and post-verdict infringement—where those questions have been answered affirmatively—the calculus for determining an appropriate or reasonable royalty rate changes. Amado v. Microsoft Corp., 517 F.3d 1353, 1361-62 (Fed. Cir. 2008). In order to avoid incentivizing defendants to fight each patent infringement action for as long as possible to obtain the maximum benefit of infringement, an ongoing post-verdict royalty may appropriately be higher than the jury’s pre-verdict reasonable royalty. Id. Here, a 15% royalty rate would still leave APC with a reasonable profit on sales as well as an incentive to sell products under the license—especially as the evidence in this action established that APC had sales in excess of $215 million from 2006-2013 on the infringing products. Further, a 15% royalty rate would more equitably compensate STI for any lost sales, customer goodwill, and lost market share. Therefore, the court shall grant STI’s motion and set a compulsory license of the patents-in-suit with an ongoing royalty rate of 15% from the date of judgment.

Slip op. at 8.



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