In its January 2018 ruling in Finjan v. Blue Coat, the Federal Circuit reversed a $24 million jury award of damages and took a strict stance on apportionment that seems to reverse the more flexible position from its Ericsson decision. This creates some uncertainty about how a reasonable royalty base and structure should be determined going forward.
A jury had previously found that Blue Coat infringed four Finjan patents, and awarded $39.5 million in reasonable royalty damages. $24 million of this relates to Finjan’s ‘844 patent, which pertains to a system that analyzes and categorizes web sites to prevent malware and bar access. WebPulse, the infringing product, contains a DRTR module (“dynamic real-time rating engine”) that analyzes previously-uncategorized URLs for malicious code and for content (e.g. pornography, news, etc.). All of the ‘844 infringing activity occurs in DRTR, but some DRTR functions infringe and some do not. Plaintiff’s damages expert determined the royalty base by multiplying all WebPulse 75 million users by 4%, having found that DRTR processes roughly 4% of WebPulse’s total web requests. No further apportionment was done. The royalty was then calculated by multiplying the royalty base by an $8-per-user royalty rate.
The court rejected the jury’s award, finding ... Read More
On appeal after a $2.2 million jury award of lost profits, the Federal Circuit vacated the lost profits award, ruling that insufficient evidence regarding non-infringing alternatives supported the finding. While this ruling may not be particularly ground-breaking, it does add another data point as to how the Federal Circuit sees the issue of non-infringing alternatives.
Presidio had sued ATC for infringement of a patent related to a multilayer capacitor design. ATC sold two types of capacitors: the infringing 550 series, and the non-accused 560L. The question before the court is whether Presidio established its right to recover lost profits for its sales of the BB capacitors, which Presidio claimed were harmed by the infringement.
The court faults the district court for focusing on the shortcomings of the 560L relative to the 550, instead of comparing it to Plaintiff’s BB product, with which the 560L would have been competing in the but-for market. In concluding that the 560L was not an acceptable non-infringing alternative, “the district court stated that ‘ATC’s own witness testified that the 560 capacitors are not as good as the 550 capacitors.”
The court then explains:
“The correct inquiry under Panduit is whether a non-infringing alternative would be acceptable compared to the ... Read More
In this district court case, the Court ruled on summary judgment that Plaintiff ATEN was not entitled to lost profits damages. Plaintiff's expert acknowledged that there were competitors in the relevant market other than plaintiff and defendant, however, he stated that he was unable to identify market share data that would allow for a market share lost profits approach. Lacking such market share data, he calculated that plaintiff would capture 100% of the infringing sales. The judge rejects this, concluding that “ATEN cannot meet the reasonable probability standard for establishing lost profits.”
This ruling is a bit interesting for a couple reasons. First, courts have long taken the approach that doubts shall be resolved against the infringer. The infringer and their expert could make rebuttal arguments with their own market share estimates to correct the numbers. Second, failing to account for some smaller competitors doesn’t mean that lost profits shouldn’t be available; it merely means that they were overestimated. So defendants could use deposition or their expert to show how to correct the calculus and leave it to the jury.
But the ruling does note that defendants suggested (probably exaggerating) that even up to 50% of the market might consist of other ... Read More
A district court in Florida doubled the reasonable royalty rate awarded by a jury to arrive at a post-judgment royalty rate. The Court had already concluded that the jury’s royalty rate (for past damages) of $103 would set the floor on the parties’ negotiations of an ongoing rate. The Court also notes that defendant BRP conceded it continues to make and sell infringing products.
While plaintiff Arctic Cat argued for an ongoing rate of $205 (double the jury’s rate), Defendant argued that the jury rate should not be increased. The Court notes, citing Paice II (Paice LLC v. Toyota Motor Corp., 504 F.3d), that “once a judgment of validity and infringement has been entered, however, the calculus is markedly different because different economic factors are involved.” The court here had already awarded treble damages ($308 per unit), and Defendant BRP must consider that it “continues to willfully infringe” the patent-in-suit. The court also seems unimpressed that Defendant’s corporate representatives recently referred to the verdict as “unfounded” and “baseless” on several occasions, and that “such actions in fact demonstrate a lack of proper respect for the Court, the jury, and the U.S. patent system.” The Court ultimately accepts Plaintiff’s proposed ongoing rate ... Read More
In Comcast v. Sprint, the district court allowed Comcast’s patent damages expert to employ “forward citation analyses” in two aspects of his reasonable royalty opinions, finding that the methodology was sufficiently reliable.
Comcast accused Sprint of infringing its ‘870 patent, which Comcast acquired in a purchase of 36 patents from Nokia for $600,000. Sprint’s expert concluded that a reasonable royalty would be in the range of $300,000 to $1.5 million. He relies primarily on this Nokia patent purchase, and corroborates his opinion by using forward citation analysis and other agreements. Forward citation analysis is “a method of estimating the value of a particular patent based on the number of times the patent is cited by later patents.” Using this process, the expert concluded that the ‘870 patent represents 2.5% of the total value of all patents in the sale. The resulting $15,000 value “corroborates” his overall opinion on value.
Comcast argues that this method has been “discredited,” citing Finjan v. Blue Coat (which we previously covered) and an academic paper. Yet the court concludes that Finjan “does not reject forward citation outright,” and that “a single academic paper—the Penn Paper—is not sufficient to rebut decades of literature supporting forward citation analysis.”
The court ... Read More