Posts Tagged: "apportionment"

On November 19, the Federal Circuit issued a precedential decision in Vectura Limited v. GlaxoSmithKline LLC in which the court affirmed a judgment entered against GSK finding that Ellipta-brand inhalers infringed patent claims asserted by Vectura. On appeal, GSK had argued that it was entitled to new trials on infringement and damages, but the Federal Circuit disagreed.

Patent damages law is one of the most complex areas in patent law and it is constantly evolving. Attorneys and courts often confuse the principles and get the law wrong. Further, even without the backdrop of constantly evolving and complex damages law, proving damages at trial is one of the hardest aspects of patent litigation. And properly apportioning damages can be one of the most difficult aspects of damages law to get right. The Federal Circuit’s two recent decisions in Exmark Man. Co. v. Briggs & Stratton Power Prods. Grp., No. 2016-2197, __ F.3d __ (Fed. Cir. Jan. 12, 2018) and Finjan, Inc. v. Blue Coat Sys., Inc., No. 2016-2520, __ F.3d __ (Fed. Cir. Jan. 10, 2018) shed light on calculating damages for multi-component products. Together, these cases show that the royalty rate must be apportioned based on the incremental value the novel elements add to conventional elements of a claim, while the royalty base must be apportioned based on the incremental value the patented features add to the accused product.

While Exmark invites a more flexible approach to apportionment, allowing, at least in some cases, a focus on the royalty rate to value the patented invention, the rate analysis itself must be properly supported. Indeed, Exmark serves as a cautionary reminder that any expert opinions on reasonable royalty damages must be closely tied to the facts of the case. Damages opinions that are purely speculative and unsupported by the facts of the case are likely to be found inadmissible. As a result, apportionment approaches will continue to be case-specific, variously focusing on the royalty base, the royalty rate, or a hybrid-model involving both elements.

On Tuesday, December 6, 2016, the U.S. Supreme Court issued a decision in Samsung Electronics Co. v. Apple which found by a unanimous 8-0 vote that a damages award for design patent infringement may be limited to revenues attributable to a component of an article of manufacture and not the entire article itself. Tuesday’s SCOTUS decision overturns a judgment reached in May 2015 at the U.S. Court of Appeals for the Federal Circuit, which would have awarded nearly $400 million in damages to Apple Inc. (NASDAQ:AAPL) for the infringement of three design patents by mobile devices marketed by Samsung Electronics (KRX:005930).

The Supreme Court need not wait for Congress to act. This is a case of first impression in interpreting the provision. Guided by its own law on design patent infringement and legislative history, the Court can reach the common sense result provided by the provision’s wording. Design owners should be made whole, but not unjustly enriched. Awarding the infringer’s total profits regardless of the contribution of the design to the end product’s value subverts patent law’s mandate to promote technological progress.