Posts Tagged: "lost profits"

Earlier today the United States Supreme Court issued a decision in WesternGeco LLC v. ION Geophysical Corp., which in a 7-2 decision ruled that a patent owner may recover lost foreign profits for infringement under 35 U. S. C. 271(f)(2). The question decided, as set forth in the opinion by Justice Thomas, writing for the majority, was: “The question in this case is whether these statutes allow the patent owner to recover for lost foreign profits.” Thomas simply answered the question in the opening paragraph saying: “We hold that they do.”

A jury verdict awarded more than $26 million to a group of plaintiffs including San Diego, CA-based gene analysis firm Illumina, Inc. The jury found that Ariosa Diagnostics infringed upon two patents, awarding $15.7 million in lost profits to Illumina and nearly $11 million in lost profits to Verinata Health… In the recent jury verdict, both Illumina and Verinata lost on willful infringement arguments made against Ariosa during the trial. However, the validity of both patents was confirmed after being challenged by Ariosa during the case.

The Supreme Court will hear WesternGeco LLC v. ION Geophysical Corp., which asks whether the Federal Circuit erred in holding that lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases where patent infringement is proven under 35 U.S.C. § 271(f)… Because lost profits damages were awarded for lost contracts for services to be performed on the high seas, outside of the jurisdiction of U.S. patent law, the Federal Circuit reversed that $93.4 million award… In December 2017, the office of Solicitor General Noel Francisco filed a brief for the United States as amicus curiae. The Solicitor General argued that WesternGeco’s entitlement to damages should be informed by the traditional common-law rule that a victim of a tort should be returned to the position that victim would have occupied if not for the defendant’s legal wrong.

On November 21st, a jury verdict entered in the Eastern District of Texas awarded $12.3 million in damages to Tinnus Enterprises and ZURU Ltd. in a patent infringement case against major U.S. telemarketing firms Telebrands and its subsidiary Bulbhead.com. The verdict, which also carries a finding of willful infringement of the patents-in-suit, further upheld the validity of patents owned by Tinnus in stark contrast to findings which have issued by the Patent Trial and Appeal Board (PTAB) on those patents.

In determining indefiniteness of a claim based on a testing method referenced in the patent, courts will evaluate whether the method is well known in the art and could reasonably be adapted for the claimed purpose. Intervening rights is an affirmative defense that may arise when claims are substantially changed after an intervening reexamination. For lost profits, a non-infringing alternative does not have to be a direct substitute; it can be an alternative in a hypothetical market absent the infringing product. Enhanced damages are discretionary and may be declined when willful infringement is not egregious, e.g. in light of its defenses and when patentee amended its claims in reexamination. Irreparable injury based on an erroneous lost profits finding will not stand. Further, a permanent injunction may be reconsidered by evaluating the sales in the actual market after the grant of an injunction.

Enforcement of patents through litigation occurs when licensing has failed to result in an arms length negotiated resolution. In other words, patent owners resort to litigation when there is a market failure… When Keller says that the value of a patent is inextricably tied to the value obtainable through litigation that is just an economic truism. If the patent has no value when enforced in litigation, whether because the subject matter of the innovation has become patent ineligible, or because of a bias that tends toward finding practically everything obvious, the patent has no enforcement value. These litigation realities spill over into the business dealings because a patent that has no enforcement value will have necessarily have no licensing value.

The standards for overturning a jury verdict and Court’s award of enhanced damages are high. The legal standard regarding lost profits is not limited to one third party sale and courts have discretion to determine if substantial evidence supports a finding of lost profits.

2015 is the second straight year in which the list of top plaintiffs has been led by eDekka LLC, a patent holding company, which at times has been accused of exhibiting trolling behaviors… Atop this list was the U.S. District Court for the Northern District of California (N.D. Cal.), which between 2005 and 2015 has awarded more than $2.1 billion in compensatory damages over the course of 2,169 cases filed. Following behind them was the U.S. District for the Southern District of California (S.D. Cal.), U.S. District Court for the Southern District of New York (S.D.N.Y.), and followed in fourth place by E.D. Tex. Median damages for cases terminating between 2000 and 2015 showed a different story, however, as that list was topped by the District of Delaware, which had a median award of $10.46 million in 40 cases with damages. The Eastern District of Texas follows in second with a $7.68 million median damages award and in third is the U.S. District Court for the Eastern District of Virginia (E.D. Va.), with a median award of $2.98 million. After that, there’s a steep drop and every other district is showing a median damages award of less than $1 million.