Patent Damages

Southern District of New York ordered new trial on damages

The Southern District of New York, in Adrea, LLC v. Barnes & Noble, Inc., et al., 13 Civ. 4137 (Judge Rakoff) (February 24, 2016), ordered a new trial on damages.  At trial, the jury found that Defendants infringed two of the three asserted patents, and awarded Plaintiff $1.33 million in lump sum, compensatory damages.  After trial, the Court found that one of the two patents was invalid.  Since the jury did not allocate its damages award between the two patents, the Court requested letter briefing from the parties on how to allocate the damages award and whether a new trial on damages was necessary.  (slip op. at 1 – 2).


NDCA rules Defendant free to advocate fully paid-up agreement for life of patents

On January 28, in Open Text S.A. v Box, Inc., Case No. 13-cv-04910-JD,Judge Donato of the NDCA denied a motion-in-limine that would have prevented Defendant Box from putting forth a fully paid-up, lump sum form of damages at trial.  Plaintiff Open Text moved to prevent Box from arguing a fully paid-up lump sum covering the life of the patents, arguing that such an outcome “would preclude Open Text from seeking an injunction or post-verdict ongoing royalties.”  The Court cited numerous cases holding that a fully paid-up lump sum award is an allowable form of damages.


EDTX allows expert to convert lump sum licenses to per unit royalties

Judge Ron Clark of the Eastern District of Texas, in Affinity Labs of Texas, LLC v. Ford Motor Co., Civil Action No. 1-12-CV-580 (Aug. 22, 2014) (Doc. No. 200), denied a motion to exclude Ford’s damages expert, Julie L. Davis, from testifying about allegedly comparable license agreements.  Affinity’s issue was that the agreements were for lump sums, and that Ms. Davis had converted those payments into per unit royalties.  The opinion is brief, and the relevant portion is quoted:


EDTX refuses to exclude expert’s conversion of lump sum into per unit royalty

The Eastern District of Texas, in Affinity Labs of Texas, LLC v. Ford Motor Co., Civil Action No. 1-12-CV-580 (Judge Ron Clark) (Aug. 22, 2013) (Doc. No. 200), denied a motion to exclude testimony from damages expert Julie Davis in which she had converted lump sum royalties into per unit royalties.  The opinion is brief, and we quote the relevant portion in full:

Affinity next argues that Ms. Davis’s testimony regarding her conversion of a lump-sum license agreement into per-unit royalties was improper and requires exclusion. “[L]ump sum payments … should not support running royalty rates without testimony explaining how they apply to the facts of the case.” Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 30 (Fed. Cir. 2012). Ms. Davis provided a chart as part of her expert report detailing her conversion of the Apple lump-sum royalty to per-unit royalty. [Doc. # 141-5]. As to the Panasonic license, upon which Affinity itself relies, Ms. Davis did not rely upon it specifically to calculate a value, but rather generally states that it would lead to a “very modest running royalty rate.” Affinityalso argues that Ms. Davis’s analysis of Ford’s licenses with 911 Notify, LLC and Tendler Cellular of Texas, LLC is flawed. The calculation of a reasonable royalty is not an exact science, and just because one approach may be better does not make other approaches inadmissible. Apple Inc. v. Motorola, Inc., --- F.3d ---, 2014 WL 1646435, *19 (Fed. Cir. Apr. 25, 2014). The issues that Affinity raises regarding Ms. Davis’s calculations are a matter of weight for the jury to determine, rather than a matter of exclusion.


NDCA addresses lump sum/EMVR and comparable licenses

On September 6, 2013, Magistrate Judge Grewal of the Northern District of California issued an opinion in HTC Corp. v. Technology Properties Ltd., Case No. 5:08-cv-00882 PSG (Doc. No. 563), addressing a Daubert motion filed on the eve of trial to strike the patentee’s expert’s damages testimony.  (Note the parties are reversed from the standard order:  HTC was accused of infringement, and TPL was the patentee.)  HTC argued that TPL’s damages expert (Dr. Stephen Prowse) had made two errors:  (1) he used a lump sum royalty to avoid the EMVR; and (2) the license agreements on which he relied were not comparable.  The court denied the motion.


DDE excludes lump sum opinion where allegedly comparable licenses used running royalties

On March 11, 2013, Judge Andrews of the District of Delaware issued an opinion in XpertUniverse, Inc. v. Cisco Systems, Inc., Civil Action No. 09-157-RGA (Doc. No. 647), granting Cisco’s Daubert motion to exclude opinions by plaintiff’s damages expert (Walter Bratic) concerning a lump sum reasonable royalty award for alleged patent infringement.  (The case also involved other claims for fraud and breach of contract.)

Bratic based his opinion on a Georgia Pacific hypothetical negotiation and concluded that Cisco would have paid a $32.5M lump sum for a license to the two patents-in-suit.  He opined that Cisco would have paid 50% of $65M he stated was invested to develop a computer system that could stand as a proxy for the plaintiff’s technology.  He used two license agreements he considered comparable and found they established a running royalty range of 3-5%.