Patent Damages

DMass requires production of communication with licensees

The District of Massachusetts, Judge Casper presiding, in Koninklijke Philips N.V. v. Wangs Alliance Corp., Civil Action 14-12298-DJC (D. Mass. Jan. 2, 2018) granted Wang Alliance Corp.’s (“WAC”) motion to compel production of certain documents related to prior licensees.[1]

WAC requested “all of [Koninklijke Phillips N.V.’s (Philips)] discussions with actual and prospective licensees relating to invalidty and/or infringement of the patents-in-suit.”  Philips argued it was “unduly burdensome to require [it] to produce correspondence from its licensees.”  The court granted WAC’s motion to compel, holding that “Philip’s contention that it would be unduly burdensome … is unavailing.”  The court noted that [o]ther courts have required patent holders to produce correspondence with licensees, given that such correspondence is relevant not only for invalidty and infringement but also damages,” citing High Point SARL v. Sprint Nextel Corp., No. 09-cv-2269-CM-DJW, 2011 WL 3241432, at *5 (D. Kan. July 29, 2011) (collecting cases).

[1] WAC’s motion also requested from Philips additional documents related to prior art (denied) and invalidity charts (allowed).


District of Minnesota Orders Production of License Negotiation Documents and Sanctions

The District of Minnesota, in Luminara Worldwide, LLC v. Liown Electronics Co. Ltd. et al., Case No. 14-3103 (Magistrate Judge Noel) (May 18, 2016), granted Defendant’s motion to compel documents related to Plaintiff’s withheld patent license.  Defendant served discovery seeking Plaintiff’s license agreements related to the asserted patent.  Plaintiff did not produce its Memorandum of Understanding or Waiver Agreement with Flipo which included Plaintiff’s agreement to release Flipo and its customer from infringement liability and Plaintiff’s waiver of its enforcement rights against Flipo.  Subsequently, Defendant’s CEO had a conversation with Flipo’s CEO at a trade show in which Flipo’s CEO said that Flipo had taken a license to Plaintiff’s patent.  After a specific request, Plaintiff produced the Memorandum of Understanding and the Waiver Agreement with Flipo, but refused to product all documents related to the those two agreements. 


EDTX Denies Plaintiff’s MIL Seeking to Exclude Settlement Demands Made in Other Negotiations

On October 30, Judge Payne of the Eastern District of Texas issued a pre-trial order in Personalized Media Communications, LLC v. Zynga, Inc., Case No. 2:12-CV-00068-JRG-RSP (Doc. No. 213), addressing motions in limine.  PMC had filed numerous MILs, including one seeking to exclude evidence of settlement demands made in other negotiations over the same patents.  The ruling is brief, and we quote it in full:

Denied. PMC provides no reason that its demands from other negotiations on

these same patents are not relevant. Contrary to Zynga’s argument, the mere fact

that such a category is not specifically identified as a factor in Georgia Pacific

does not mean that it is wholly irrelevant or otherwise inadmissible.

This is a promising ruling for defendants facing plaintiffs who have previously licensed the patents-in-suit (or have reached prior litigation settlements).  Settlement demands from other litigations (or even parties who have previously settled out of the current litigation) may reflect numbers much smaller than the damages sought at trial against the current defendant.  Of course, the defendant will have to introduce evidence showing the comparability of the circumstances surrounding the prior settlements and the current damages case, e.g., same products at issue, similar sales volume, effective royalty rates, and other ways to demonstrate comparability.  But if this marks a trend, defendants may have a forceful weapon to inform the jury that the plaintiff’s damages figure is inflated.


DDEL approves case-by-case approach to discovery of license negotiation documents

The District of Delaware in Sciele Pharma, Inc. v. Lupin, LTD, Civil No. 09-37 (RBK/JS) (Redacted Version) (D. Del. January 31, 2013), ruled on plaintiff’s motion seeking production of certain license agreements and related negotiation documents.  The portion of the opinion concerning production of negotiation documents is most interesting.  The court granted the motion as to negotiation documents, but indicated that production in such cases should be based on a case-by-case approach.

Having determined that the defendant was required to produce some license agreements, it was compelled to address plaintiff’s request for the underlying documents, including “negotiations, forecasts and analysis.”  The court noted that there are cases going both ways on settlement negotiation documents, citing:  Tyco Healthcare Group LP v. E-Z-EM, Inc., No. 2:07-cv-262 (tjw), 2010 wl 774878, at *2 (E.D. Tex. March 2, 2010) (ordering production); High Point SARL v. Sprint Nextel Corp., C.A. No. 09-2269-CM-DJW, 2012 WL 1533213 (D. Kan. April 30, 2012) (denying production even though license agreements ordered to be produced).  The court recognized the split was not surprising given the broad discretion afforded courts in deciding discovery issues.

The court declined to adopt a blanket rule on the discoverability of negotiation documents, instead opting for a “case-by-case approach … to determine whether the requested documents were discoverable.”  The court cited Charles E. Hill & Assoc., Inc. v. ABT Elecs., Inc., 854 F. Supp. 2d 427, 429 (E.D. Tex. 2012), in support of this approach.  However, the Delaware court also agreed with Charles E. Hill that “as a general rule license negotiations are less probative and more prejudicial than the licenses themselves,” and that “negotiation documents ‘primarily add heat and not light to an already difficult judicial chore.’”  Slip op. at 10 (quoting Charles E. Hill).


NDCA in Implicit v. Juniper hears renewed MTC and orders production of license negotiations

On July 23, 2012, in Implicit Networks, Inc. v. Juniper Networks, Inc., No. C 10-04234 SI (NDCA), the court considered a renewed motion by defendant to compel production of license negotiation documents and information.  On June 5, 2012, the court rejected a motion to compel on this same issue.  We covered that decision in a July 6, 2012 post.


EDTX orders production of settlement communications related to the patent-in-suit

On May 2, 2012, in Charles E. Hill v. 1-800 Flowers.Com, Inc., Case No. 2:11–CV–174 (EDTX), Judge Gilstrap granted the defendant’s motion to compel the plaintiff to produce both the draft license agreements and any communications between the plaintiff and third parties that related to negotiations of license agreements to resolve past claims under the patent-in-suit.


CAFC: Matter of First Impression—Settlement Negotiations Are Discoverable

On April 9, 2012, the Federal Circuit in In re MSTG, Inc., Misc. Docket No. 996, held as a matter of first impression that license negotiation communications, even with other parties in the same case (including those who had dropped out of the case), are not privileged and and thus may be discoverable.

Patentee MSTG argued two issues:  1) that license negotiations between it and its other licensees are protected by a settlement negotiation privilege, and 2) that the district court had abused its discretion in ordering production of underlying license negotiations where the settlement agreements were fully integrated.  The Federal Circuit rejected both arguments.


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.