Posts Tagged: "royalty rate"

The Supreme Court and Federal Circuit permit prevailing patentees to obtain a higher royalty rate for an infringer’s post-judgment infringing sales. But whatever the reason, district courts have oft-resisted, even establishing presumption-like rules that a court’s post-judgment rate will merely match the pre-judgment rate determined by the jury. While the Federal Circuit recognized the availability of post-judgment running royalties more than a decade ago, litigators addressing the issue at the trial level still have leeway to urge many of the principles that govern and can shape this process. We outline the developments in this area of law since its 2007 inception, including various open issues left for the Federal Circuit’s precedential consideration. 

The Federal Circuit upheld the district court’s damages award of approximately $140 million for Sprint after Time Warner was found to infringe claims of five patents covering technologies related to methods for linking circuit-switched and packet-switched networks within a telecommunications system. Despite the nonprecedential designation, Circuit Judge Haldane Mayer issued a dissenting opinion reflecting his views that the damages award should be vacated and the asserted patent claims found invalid for failing the written description requirement… The Federal Circuit majority also disagreed with Time Warner that the references to the 25 percent rule of thumb in the 2007 Vonage verdict made it inadmissible as evidence to the jury in district court.

On Monday, September 25th, Zephyr Cove, NV-based patent owner VirnetX Holding Corporation filed a Form 8-K with the U.S. Securities and Exchange Commission (SEC) regarding an agreement between that firm and Cupertino, CA-based consumer electronics giant Apple on costs and prejudgment interest related to the ongoing patent infringement proceedings between the two companies. A press release attached to the Form 8-K indicates that VirnetX and Apple agree to add costs and prejudgment interest of $93.4 million to the $502.6 million patent infringement verdict awarded to VirnetX in district court.

Less than 48 hours before the 60th Annual Grammy Awards in New York City, the Copyright Royalty Board (CRB) ruled to increase royalty payments to songwriters and music publishers from music streaming companies by nearly 44 percent, the biggest rate increase granted in CRB history. These rates will go into effect for interactive streaming and limited download services like Amazon, Apple, Google, and Spotify for the years 2018-2022, and will transform how songwriters are paid by these interactive streaming services.

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.

In traditional music recording, artists have had to choose to license their music through major music industry organizations like ASCAP and BMI. In the age of streaming music through Spotify, Pandora and other services what is the purpose of these organizations? The licensing groups have served as clearinghouses for smaller players in the music industry who cannot feasibly deal with multitudes of licensees on their own. But with Taylor Swift and other “major” artists choosing to deal—or not deal—with the streaming services that opens the question about blanket music performance licenses.

It’s not just businesses and corporate environments that need intellectual property protection – artists of all kinds must protect their work too. Specifically, musicians have a lot to copyright and trademark – band names, original music, and album art, to name a few… When it comes to YouTube, today, musicians should pay close attention to monetization of their IP rights, according to Umanoff. This means making sure that YouTube has reference files, which are samples of the copyrighted materials, so that YouTube can attempt to recognize an artist’s work when incorporated in user-generated content.She said, “The artist must also ensure that their reference files contain accurate metadata so that YouTube knows who to pay when copyrighted works are streamed. Independent companies specializing in confirming that YouTube content is monetized by uploading reference files and manually checking metadata are emerging and growing a new frontier of music technologists.”

A recent report from French consulting firm PMP Conseil made waves in the media for indicating that public performance exemptions in U.S. copyright law, such as Section 110 exemptions, cost copyright owners $150 million each year in lost royalties, $44 million of which is attributable to U.S. copyright owners in Europe. On November 11th, this study was presented by the International Council of Creators of Music (CIAM) at it’s annual conference in London. CIAM maintains that the U.S. is one of two “more economically developed countries” that have an exemption in place for playing music in bars, restaurants and retail establishments by radio or television.

How can a patent that is deemed essential for a standard not be infringed in a product that implements that standard? One possible explanation could be that the claim of essentiality is incorrect. That’s why it is important to document essentiality with a claim chart and ask an independent expert to verify that infringement of the patent claim is prescribed by the standard. But an independent verification is still no guarantee that court will agree that such a patent is really infringed by a product. Another explanation is that the patent is essential for an option in the standard and that the product does not implement this particular option. Most technical specifications of interface standards have options, describing alternative methods to implement the standard. Manufacturers can choose one of the options and will not infringe patents that are essential for implementing another option.

This all came to a head when, on February 22, 2012, Microsoft Corporation filed a formal competition law complaint against Google with European Union antitrust regulators. Microsoft’s complaint was brought about because Google (i.e., Motorola Mobility) “has refused to make its patents available at anything remotely close to a reasonable price” and “attempting to block sales of Windows PCs, our Xbox game console and other products.” Well isn’t Google’s “maximum per-unit royalty of 2.25% of the net selling price for the relevant end product” in compliance with FRAND!? If you consider that often dozens (and sometimes, hundreds) of patents cover a single device, the answer is a resounding “no.” At 2.25% per patent, it would take only about four dozen patents before the entire selling price would be paid in royalties – an obviously absurd result.