Posts Tagged: "patent damages"

Carnegie Mellon University (CMU) sued Marvell Technology Group for infringing two patents related to a detector for reading data stored on hard-disk drives. A jury returned a verdict for CMU, and awarded $1.17 billion as a reasonable royalty for infringement, based on a royalty of 50 cents per chip. The district court increased the damages by 23% for willful infringement and entered a verdict of $1.54 billion in damages, plus a continuing royalty of 50 cents per chip. Marvel challenged the enhancement of damages for willfulness. While Marvell’s chips blatantly copied the CMU patents, Marvell’s invalidity defenses raised in litigation were not objectively unreasonable.

In a concurring opinion, Judge O’Malley, who was joined by Judge Hughes, wrote that she felt constrained by the Federal Circuit’s precedent in In re Seagate and Bard Peripheral Vascular v. W.L. Gore, but that recent Supreme Court decisions call into question the continued viability of that precedent. As such, Judges O’Malley and Hughes have urged the Federal Circuit to reconsider en banc the standard for awarding enhanced damages under 35 U.S.C. 284. With willful damages back on the table future patent reform is in question.

The way that many plaintiffs argue damages has always amazed me, and this shift to reasonable royalties at least somewhat vindicates my long held position. The law on lost profits makes it extremely difficult for a patentee to prevail, although historically lost profits has been where big awards have come. Still, reasonable royalties are guaranteed as a minimum for a victorious plaintiff. I have long believed that spending more time making a compelling reasonable royalty case and painstakingly establishing the reason a reasonable, yet high royalty would pay dividends. I suspect this is particularly true in a world where there are over 7 billion people and counting, and by some estimates the number of mobile phones is predicted to surpass the number of people on the planet by the end of 2014. There were over 1 billion smartphones purchased in 2013. The sheer numbers of devices that can infringe are staggering.

According to data from Lex Machina, in 2013, average patent infringement awards increased 28% and median patent infringement awards increased 22% when compared with infringement damages awards during 2012. The question for in-house attorneys, as well as for plaintiffs attorneys, is whether this trend will continue in 2014 and beyond.

Professor Paul Janicke of the University of Houston Law School conducted a study of all damage verdicts in patent infringement cases between 2005 and 2007. He found no pattern of “runaway jury awards.” In fact, many of the biggest damage awards of that time, including the $1.5 billion award Lucent won from Microsoft, were set aside or greatly reduced by the judges. Even Apple’s $1 billion 2012 patent verdict against Samsung was recently slashed 43 percent. Why, then, are claims of a “broken” patent system rife with “excessive damage” awards so widely believed?

A Manhattan federal jury recently ordered Nintendo Co. Ltd. to pay Tomita Technologies International, Inc. (“Tomita”) over $30 million in damages in a patent infringement case that concerned certain 3D technologies. Tomita, which originally filed the claim against Nintendo back in June of 2011, claimed that Nintendo’s 3DS hand-held video game system (which launched in March of 2011) infringed on Tomita’s patent called “Stereoscopic image picking up and display system based upon optical axes cross-point information” (also known as the ‘664 patent), which is technology that shows 3D images that can be viewed without the use of special 3D glasses. Nintendo has made it clear that it is confident that the verdict will be set aside and that it will not impact its continued sales of that gaming system or any of its other systems, software and accessories.

Rader: “I come from the commercial law area where to tell the CEO that “well I’m going to have to balance several factors and ask three courts over a period three years whether or not you can have this product enter the market” is simply an inadequate response. In the commercial area we have to have a predictable, yes or I will use the B word — a Bright line rule. Now, that’s lead to kind of this culture clash where the Supreme Court says there needs to be more balancing and flexibility. The formalism of the Federal Circuit is uncomfortable to [the Supreme Court]. But that’s a function of our legal culture. I think perhaps the answer is the Federal Circuit needs to gain a little bit more flexibility from its experience with the Supreme Court, but I hope the Supreme Court also recognizes that the Federal Circuit is reaching its decisions for well considered reasons.”

On Friday March 1, 2013 Judge Lucy Koh handed down her decision regarding various motions that were filed on behalf of Apple Inc. (“Apple”) and Samsung Electronics Co. (“Samsung”) over the past few months post-trial. Specifically, Apple requested additur, supplemental damages, and prejudgment interest, while Samsung moved for a new trial on damages or remittitur. Judge Koh determined that the “Court has identified an impermissible legal theory on which the jury based its award, and cannot reasonably calculate the amount of excess while effectuating the intent of the jury.” The total amount stricken from the jury’s award was $450,514,650 –pending a new trial on damages. The jury awards stands for the remaining 14 products for a total of $598,908,892 in favor of Apple.