Patent Law Practice Center

Court Finds 25 Percent “Rule Of Thumb” To Be A Fundamentally Flawed Patent Damages Tool

Today’s guest post was written by our friends at Foley Lardner, Cynthia J. Franecki and Rebecca J. Pirozzolo-Mellowes.

In Uniloc USA, Inc. v. Microsoft Corp., ___ F.3d ___ (Fed. Cir. Jan. 4, 2011), the Federal Circuit addressed arguments relating to a number of damages issues. Most notably, the Federal Circuit held that the 25 percent rule of thumb often used by damages experts in patent infringement cases “is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation” and “inadmissible under Daubert and the Federal Rules of Evidence.”

Background

United States Patent No. 5,490,216, assigned to Uniloc, relates to “a software registration system to deter copying of software.” Uniloc accused Microsoft of infringing the ‘216 patent. In 2007, the district court granted summary judgment of non-infringement. Specifically, the district court concluded that the algorithm used in Microsoft’s technology was different from that claimed in the ‘216 patent. On appeal, the Federal Circuit reversed and remanded the case. Thereafter, a jury found: (1) the ‘216 patent valid and infringed, and that (2) Microsoft’s infringement was willful. The jury then awarded Uniloc $388 million in damages. Microsoft filed a number of post-trial motions, including a motion for a new trial on damages based on its assertion that Uniloc’s expert improperly relied on the 25 percent rule of thumb and the entire market value rule. The district court granted Microsoft a new trial on damages based on the improper use of the entire market value rule, but rejected Microsoft’s arguments regarding the 25 percent rule. (more…)

US Supreme Court Accepts Microsoft Appeal in i4i Case

The following was sent in by Gene Quinn, of IPWatchdog and Practice Center Contributor.

Yesterday, the United States Supreme Court granted certiorari in Microsoft Corporation v. i4i Limited Partnership, with Chief Justice John Roberts taking no part in the decision or petition. The Supreme Court did not request the views of the Solicitor General, choosing rather to accept the matter with no input from the United States government.  The decision to grant cert. comes only days after the United States Patent and Trademark Office refused to grant reexamination of the patent in question.

Microsoft had filed an ex parte reexamination request on the patent in question, US Patent No. 5,787,449. The ‘449 patent exited reexamination unchanged. Microsoft then filed a second ex parte reexamination request, and it is this second request that was denied by the Patent Office on Wednesday, November 24, 2010. The denial of this second request means that the Patent Office did not believe there to be a substantial new question of patentability. (more…)

Contemporary Issues in Patent Royalty Damages

Written by our friends at Kilpatrick Stockton, E. Danielle Thompson Williams and Leslie T. Grab, Ph.D..

TMI:  How Much Settlement Information is Too Much Settlement Information?

I. Introduction

“Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty.”[1]  Damages are a hotly contested issue in nearly every patent litigation.  Patentees have traditionally had three remedies available to compensate for patent infringement:  lost profits; an established royalty; or a reasonable royalty.  Each of the remedies considered unique information on which a patentee could rely in establishing a damages award.  When requesting a reasonable royalty, patentees also often relied on the entire market value rule as another tool to determine the amount of the damages award.  However, a recent string of cases has changed the methodologies for determining a reasonable royalty as well as the standard for using the entire market value rule.  These cases put both the district courts and patent litigants on notice that the standards for establishing damages have been tightened.  Patentees must now “carefully tie proof of damages to the claimed invention’s footprint in the marketplace.”[2]  These decisions have benefits and risks for both plaintiffs and defendants in litigation that include both settlement strategies as well as expert testimony. (more…)

Patent Damages: Harmonizing Recent Judicial Developments With the Georgia-Pacific Factors

Patent Damages law is rapidly evolving with the recent Federal Circuit decisions on the issue and the statutory changes under serious consideration.

In an informative two hour program entitled “Patent Damages in Flux?:  Harmonizing Recent Federal Circuit Decisions With The Georgia-Pacific Factors 2010“,  Jennifer A. Sklenar of Howrey LLP, Jeffrey D. Sullivan of Baker Botts LLP and John M.  Griem, Jr. of Milbank delved into the Patent Damages issues including a review of the recent judicial developments and put them in context of the familiar Georgia-Pacific factors.  They also discussed the current state of potential statutory changes and how they might change patent damages litigation practices.

Jennifer A. Sklenar gave a very informative and detailed presentation of the recent Federal Circuit decisions on patent damages.  Specifically, she discussed Lucent Tech., Inc. v. Gateway, Inc., 580 F.3d 1301, i4i Ltd. Partnership v. Microsoft Corp., 598 F.3d 831, ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, and Wordtech Sys., Inc. v. Integrated Network Sol’n, Inc., 2010 WL 2384958 cases.   Slenar has been kind enough to share her slides, entitled “Recent Federal  Circuit Decisions on Patent Damages” with you here.

Jeffrey Sullivan then summarized what the trends seem to be in the damages cases.  He says that in recent years we’ve seen the Federal Circuit take up damages issues more frequently.  That the court has done so in two primary areas related to reasonable royalty calculations: (more…)

Patent Litigation: The Joint Defense Group

Trevor Carter, partner at Baker & Daniels and Practice Center Contributor, is chairing PLI’s program: The Joint Defense Group in Patent Litigation: Necessary Evil or Useful Asset?, scheduled for this Wednesday, July 14, 2010.  The first hour of the program will be a presentation on key legal issues surrounding  joint defense groups.  This presentation will focus on the nuts and bolts of joint defense groups, including how to properly enter into joint defense relationships to protect privilege and other interests.  The second hour will be a panel presentation focusing on practical aspects of joint defense groups.  Counsel with significant experience litigating in and against joint defense groups will provide their perspective on how to efficiently work with joint defense opponents and co-defendants.  Issues that will be addressed include conflicts, privilege, confidentiality, settlement concerns and strategy, hiring and use of experts, and working with customers and vendors who are not part of the lawsuit.

Michael A. Morin, partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP and Samantha Weil, summer associate at Finnegan, Henderson, et. al, have prepared an article for the program titled: Hang Together or Hang Separately: The Common-Interest Privilege .  Michael Morin will be speaking at the Joint Defense program on Wednesday. (more…)