On remand after the Federal Circuit’s 2009 decision (Lucent v. Gateway et al.), the district court reconsiders the appropriate royalty base then reviews four new damages approaches by Raymond Sims, Lucent’s damagesexpert, and rejects one of them on Daubert grounds.
First, Lucent whittled down the total Outlook revenues from $7.4 billion to $4 billion to only account for where the Day patent was practiced. The Court finds this appropriate, although noting that damages do not have to be limited to actual use (only “correlated, in some respect”). Yet the Court rejects this $4 billion as a royalty base because Lucent fails to show, under the entire market value rule, that the Day patent was the basis of customer demand (due to the numerous non-infringing features) and that, under Uniloc, the entire revenue of Outlook could have a potentially prejudicial effect (although presenting this apportionment on a unit-price basis is acceptable). Instead, “Lucent must perform an additional apportionment” to meet the entire market value rule.
On the four Sims approaches, the Court first rejects his approach using the price of add-in programs as a proxy for value since Lucent failed to show any actual sales of those add-ins. The Court then accepts a calculation of value based on the time saved by using the date picker. The Court also accepts a calculation of value based on a survey showing that 7% of purchasers would not have bought Outlook without the patented features. Lastly, the Court accepts the methodology that the parties would “meet in the middle of their respective walk away approaches.”
Citation: Lucent Technologies, Inc. v. Microsoft Corporation, 07-CV-2000H (S.D. CA, July 13, 2011, Order) (Huff)