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ARTICLES
ResQNet on Remand: Court Rejects Expert Opinions and Sets a Royalty Rate
Recall that the Federal Circuit remanded this case for a recalculation of a reasonable royalty, finding that the plaintiff’s expert and the lower court impermissibly relied upon broader re-branding and re-bundling licenses that furnished finished software products, source code, and other services. Upon remand, the court rejects revised opinions by both plaintiff’s and defendant’s experts and assesses a 3% royalty rate. After excluding the re-branding/re-bundling agreements that called for 25% to 40% royalties, both experts (Dr. Jesse David for ResQNet and Brian Blonder for Lansa) focused on two remaining agreements, one being a settlement. Note, too, that the Federal Circuit had hinted that one of the “straight” licenses called for royalties of roughly 1.5 to 2%; see ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 868 (Fed. Cir. 2010). The court endorses Dr. David’s scaling up of the royalty to account for a difference in the royalty base, but the court finds that he did not adequately apportion the rate to account for the multiple patents covered. It thus rejects his royalty opinion of 8% to 10% (down from his prior opinion of 12.5%). Meanwhile, Mr. Blonder divided the royalty rate by the number of patents covered, to arrive at a royalty ... Read MoreOracle v. Google: Strike Two for Oracle’s Damages Positions
We at IP Value Blog have been following the damages arguments in this case, about which the court has expressed some firm opinions. In July, the court excluded the opinions by Oracle’s expert Dr. Cockburn for several reasons, including a failure to apportion the demand for Google’s Android with respect to plaintiff’s Java platform and specifically the asserted claims. The court at that time gave suggestions on how Oracle should structure its revised damages opinions. After reviewing the revised opinions, the court now strikes Dr. Cockburn’s opinions on apportionment and a large portion of his second report. As the court suggested in July, Dr. Cockburn started his assessment of a reasonable royalty with the $100 million licensing offer by plaintiff Sun, then apportioned this downward. For the apportionment, Dr. Cockburn analyzed the value of the claimed features with respect to the Android platform, but the court faults him for not analyzing the value of the claimed features with respect to the other components of value that made up the licensing offer that the parties were considering (citing a 2002 Medtronic case: Medtronic, Inc. v. Boston Scientific Corp., 2002 WL 34447587 at *12, D. Minn. Aug. 8 2002). The court also faults Dr. ... Read MoreJudge Declines to Order Plaintiff to Detail EMVR Strategy in ROG Response
Due to the dramatic impact that the Entire Market Value Rule can have on the amount of damages (by expanding the royalty base), it stands to reason that defendants would want to know as early as possible if plaintiff will attempt to apply the EMVR rule to use a larger royalty base. This California court considered a motion by defendant HP to compel plaintiff to provide more definite responses regarding its possible use of the EMVR. HP could then presumably tailor its fact discovery and focus its expert's work accordingly. The plaintiff’s position, not surprisingly, was that it was a matter for expert discovery, not fact discovery, and that it will be disclosed later in its expert reports. The court sided with plaintiffs, noting that HP “does not identify or specify in any real manner exactly why the discovery which it seeks must be received before the close of fact discovery.” As a general proposition, the courts seem increasingly inclined to help the parties arrive at a general understanding of the damages issues as early as possible, as evidenced by Judge Rader’s recent comments to that effect. This might suggest that had HP been more specific about how the EMVR issues ... Read MoreOn Remand, Lucent v. Microsoft Judge Slashes Jury’s Damages
Following the jury’s $70 million lump-sum royalty damages verdict from July, the district court judge slashes Lucent’s award to $26 million, finding several shortcomings in Lucent’s damages position that the jury had accepted. This case deals with Lucent’s Day patent, called the “date picker” patent since it allows users to schedule appointments by clicking on the Outlook calendar. First, the judge found that Lucent failed to properly apportion the value of the Day patent. Lucent’s damages expert, Ray Sims, attempted to calculate the profits attributed to the Day patent by multiplying the total Outlook licenses by the percent of users who use the feature (43%) times the percent of users who would not buy Outlook without the feature (7%), arriving at 3%, which leads to 3.3 million license sales. Using the full value of Outlook of $67 and a 76% profitability, this translates to an “expected foregone profit” of $139 million. The judge had previously warned Lucent about using the full $67 value, since Lucent could not show that the Day patent was the basis for consumer demand. The court had stated that “use as a proxy for value does not appropriately account for all the other unpatented features” and that ... Read More
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