Patent Damages

NDTX Strikes One License and Allows Another; Finds Fault in Expert’s Use of Entire Market Value Rule

On June 10, 2011, Judge Reed O’Connor of the Northern District of Texas issued an opinion granting in part and denying in part Universal Lighting Technologies’ (“defendant”) Motion to Strike, Limit, or Exclude Certain Expert Testimony.  Lighting Ballast Control, LLC, v. Phillips Electronics North America Corp, Case No. 7:07-CV-29 (N.D. Tex., June 10, 2011). Defendant had moved to strike expert testimony and report on two grounds: 1) the expert proposed royalty rates for the patent-in-suit while relying on rates from two licenses most favorable to plaintiff; and 2) the expert improperly tests or “checks” the reasonableness of his selected royalty rates using the entire market value of the accused products.


Mondis v. LG: EDTX Resolves Battle Between Comparable Licenses and EMVR in Favor of Licenses

Judge Everingham in EDTX was faced with a motion noting the tension between two (potentially) conflicting issues of damages law.  Specifically, he was asked to grant a Daubert motion for Plaintiff’s expert based on that expert’s use of the Entire Market Value Rule, but where the royalty base was chosen because it was the royalty base from numerous comparable license agreements.  Judge Everingham noted that there was tension between the EMVR and use of comparable agreements based on the EMVR, noting that if the EMVR “were absolute, then it would put Plaintiff in a tough position because on one hand, the patented feature does not provide the basis for the customer demand, but on the other hand, the most reliable licenses are based on the entire value of the licensed products.”


NDGA strikes a “project-specific” patent license agreement between plaintiff and defendant

On March 29, 2011, Judge Batten of the Northern District of Georgia granted Defendant Southwest’s motion to strike the project-specific license agreement that it had entered into with Plaintiff Insituform Technologies (“ITI”). Insituform Techs., Inc. v. Southwest Pipeline and Trenchless Corp., Case No. 1:08-CV-333-TCB (N.D. Ga., Mar. 29, 2011).  ITI was attempting to use the agreement to support its damages claim against another defendant, Cosmic-Sondermaschinenbau GmbH, which had defaulted and was thus liable for infringement.  Southwest moved to strike its license with ITI because the terms of the agreement prohibit ITI from relying on or referring to it in the litigation.  Southwest argued that, if ITI is allowed to use the agreement to establish royalties owed by defaulting Cosmic, then ITI will turn around and use the established royalty against Southwest later in the case, if it is found liable.


SDCA Allows Discovery of License Agreements That Involve Many Patents Not Asserted in the Litigation

On December 10, 2010, Magistrate Judge (now District Judge) Battaglia of the Southern District of California issued an order compelling defendant Nokia to produce all licensing agreements covering wireless products that comply with 3G standards known as CDMA and WCDMA.  SPH America, LLC v. Acer, Inc., Civil No. 09cv2535 JAH (AJB) (S.D. Cal., Dec. 10, 2010).  In particular, SPH sought Nokia’s license agreements where it licensed its CDMA or WCDMA technology to others and all of its cross-licensing agreements concerning CDMA or WCDMA technology.  Apparently, the technology at issue was WCDMA.  SPH argued that these broad Nokia agreements contained at least two patents that implemented the WCDMA standards.  SPH contended that the license agreements were relevant because they

demonstrate rates paid by licensees for the use of patents comparable to SPH’s patents-in-suit (Georgia-Pacific factor 2); show customary rates in the industry for the use of analogous inventions (Georgia-Pacific factor 12); and show rates upon which a licensor and a licensee would have reasonably and voluntarily agreed (Georgia-Pacific factor 15). See Georgia-Pacific v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970) affs, 446 F.2d 295 (2nd Cir. 1971).  SPH argues that because the licenses covering CDMA and WCDMA technology  are relevant, there is little, if any, burden on Nokia to produce these agreements.


EDTX Excludes Lump Sum License Agreements, Allows Expert to Testify About Merits of Inventions

On January 14, 2011, Judge Folsom of the Eastern District of Texas addressed pre-trial damages issues in Lectec Corp. v. Chattem, Inc., Civil Action No. 5:08-CV-130.  The patents at issue are directed to medicated patches, and the accused products include “Icy Hot” patches and “Tiger Balm” patches.


Judge Davis, EDTX, compels production of negotiation documents re license agreements

Since the Federal Circuit rendered its decision in, Inc. v. Lansa, Inc., 594 F.3d 860, 868-69 (Fed. Cir. 2010), numerous district court decisions have been faced with the issues of admissibility of litigation settlement agreements and discoverability of the underlying negotiation documents and communications.  These issues have become increasingly important due to a statement from ResQNet, in which Judge Rader wrote that “the most reliable license in this record arose out of litigation.”

Some plaintiffs have seized on this statement and begun to press the importance of prior settlement agreements in determining reasonably royalty damages.  On the flip side, some defendants who suspect that the plaintiff settled prior suits for low numbers want to see those agreements and potentially show them to the jury to drive the damages down.