Articles Posted in Damages

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During a jury trial, Ericsson asserted that TCL infringed claims 1 and 5 of U.S. Patent No. 7,149,510 (the “‘510 Patent”) by selling phones and devices that included the Google Android operating system. The jury found that TCL infringed claims 1 and 5, that TCL’s infringement was willful, and awarded $75 million as a lump sum royalty. TCL moved for a new trial on infringement and damages. The district court decided the motion for new trial on damages should be granted for the reasons explained below.

The damage theory Ericsson presented at trial was based on the opinions of Dr. William Wecker and Mr. Robert Mills. Dr. Wecker provided analysis of a consumer survey that, according to Ericsson, approximated the apportioned value of the patented invention. Mr. Mills in turn used Dr. Wecker’s survey results to estimate a per phone royalty rate the parties would have agreed to at the hypothetical negotiation. Dr. Wecker’s survey was designed to determine how many consumers that had purchased an Android-based smartphone during the relevant time would have decided against purchasing the phone if the phone lacked the accused security and permissions feature, i.e.: the ability to control whether third-party applications can access native functionality on the phone. Mr. Mills used Dr. Wecker’s survey results to determine a per phone royalty rate. According to Mr. Mills, Dr. Wecker’s survey results indicated that about 28% of consumers who purchased accused TCL phones would not have made those purchases if the phone lacked the allegedly infringing feature.

The district court concluded that there were at least two independent reasons why a new trial on damages was necessary. “The first and most important is that the manner in which Mr. Mills used Dr. Wecker’s survey results is not based on sufficient facts or data, not the product of reliable principles, and not reliably based on the facts of the case. See Fed. R. Evid. 702; Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579(1993). Namely, Mr. Mills directly translated the roughly 28% of survey respondents who allegedly would not have bought a TCL phone without the infringing feature to TCL’s profit in an effort to determine the potential “at-risk” profit. This step in Mr. Mills’ analysis was unreliable.”

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In this patent infringement action, Plaid sought to exclude the entirety of the plaintiff’s damage expert’s, Robinson’s, reasonable royalty analysis as based on an apportionment “plucked out of thin air.” Yodlee opposed the motion and asserted that its apportionment methodology was justified by the facts of the case.

The district court began its analysis by noting that “[Ii infringement is shown, the jury will need to ‘apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features using reliable and tangible evidence.’ Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014) (internal quotation marks omitted). ‘The essential requirement is that the ultimate reasonable royalty award must be based on the incremental value that the patented invention adds to the end product.’ Id.”
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In this discovery dispute in a patent infringement action, Frontgate contended that Balsam Brands, Inc. (“Balsam”) failed to adequately respond to an interrogatory seeking information about Balsam’s damages. As explained by the district court, Balsam’s response stated that it: (1) “intends to seek lost profits on the 1,662 Flip Trees that it did not sell during the 2015 Christmas season”; and (2) “intends to seek a reasonable royalty on all Inversion Trees sold by Defendants for which lost profits are not available.” Balsam further responded that “historical data on Balsam’s cost, sales, inventory, and pricing” was included in materials produced.
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In this patent infringement action between Finjan and Sophos, the district court had previously granted a motion to exclude Finjan’s damage expert. The district court explained that the expert’s, Layne-Farrar, “method of applying a royalty rate to an apportioned base for each patent and adding the resulting royalties was not reliable because under her apportionment method she had attributed the full value of certain features of Sophos’s products to multiple patents and so had counted the value of these features multiple times.”

The district court concluded that this methodology “functioned to inflate Layne-Farrar’s royalty base and her final damages calculation.” Nonetheless, the district court permitted the expert to submit a supplemental report. Sophos then moved to exclude the supplemental report as well.
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MAX Encryption Technologies (“MAZ”) filed a patent infringement action against Blackberry for patent entitled “Method of Transparent Encryption and Decryption for an Electronic Document Management System,” U.S. Patent No. 6,185,681 (the “‘681 patent”). As the case progressed toward trial, Blackberry filed a motion to exclude the testimony of MAZ’ damages expert, Chase Perry.

As explained by the district court, “[i]n reaching his baseline estimate for damages, Mr. Perry relied on a previous license agreement involving the patent-in-suit. The previous license agreement, however, was made in the context of settling a litigation dispute, and thus did not reflect the royalty the parties would have reached ‘just before infringement began.’ Therefore, the damages amount arrived at in the settlement agreement had to be translated into a damages number that the same parties would have arrived at just before infringement began had they, instead, assumed that the patent was infringed and valid. This implies that the amount of the previous settlement would need to be increased to arrive at the royalties that would have been agreed to in a hypothetical negotiation.’
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After a jury awarded the Trustees of Boston University (“BU”) a $9.3 million dollar one-time lump-sum payment from Epistar and a $4 million dollar one-time lump-sum payment from Everlight, the district court denied the defendants’ motions for judgment as a matter of law and/or a new trial, other than with respect to the issue of damages. On the damage issue, the district court granted a remittitur because the lump-sum damages awards were not supported by the evidence.

After the district court denied a motion for reconsideration, BU notified the district court that it elected to have a new trial on damages or, in the alternative, to permit an interlocutory appeal.
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In this patent infringement action, the defendants filed a motion in limine to exclude evidence of any claimed lost profits damages alleged by the plaintiff, the inventor of the patent-in-suit.
The defendants asserted that the plaintiff could not recover lost profits damages because he did not make or sell products covered by the patent-in-suit.

In support of their position, the defendants cited cases stating that only a plaintiff who sells the patented device may claim lost profits damages. See Poly-America, L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004). The defendants also cited cases showing that a plaintiff cannot claim as patent infringement damages the lost profits of a related corporation, arguing that the plaintiff could not recover the lost profits of Death Door Marine, Inc. (“DDM”) because DDM’s profits “flow inexorably” to the plaintiff.
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The defendants’, Roland DGA Corporation and Roland DG Corporation (collectively “Roland”), filed a motion for summary judgment against plaintiff, Gerber Scientific International, Inc. (“Gerber”) regarding Gerber’s claims for lost profits and enhanced damages. Gerber’s claim for lost profits was based, in part, on survey evidence.

The district court explained that “[t]o recover lost profits a patentee must show that „but for’ infringement it reasonably would have made the additional profits enjoyed by the infringer.” Micro Chemical, Inc. v. Lextron, Inc., 316 F.3d 1119, 1122 (Fed. Cir. 2003). “A patentee may resort to any method showing, with reasonable probability, entitlement to lost profits „but for’ the infringement.” Id.
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In this patent infringement action between Chrimar Systems, Inc. (“Chrimar”) and Alcatel-Lucent USA, Inc. (“Lucent”). Lucent sought production of the damages expert report of Plaintiffs’ damages expert, Robert Mills, that was created for a litigation currently pending in the Northern District of California.

Chrimar opposed the request on the ground that the expert report was covered by a protective order issued by another Federal court. The district court in Texas agreed.
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The plaintiff, Radware, planned to present damages theories in its closing argument seeking more than twice the damages that its retained expert on damages computed. The district court noted that “[w]hile expert testimony is not always required to prove damages, any damages theory must have evidentiary support. Radware had a duty to disclose its damages theories and evidence under Federal Rule of Civil Procedure 26(a)(1)(A)(iii) and in response to F5’s discovery requests and this court’s orders. Radware attempted to do that by pointing to the calculations of its expert Mr. Malackowski. The permissible scope of Radware’s damages contentions at trial is thus limited by Radware’s pretrial disclosures–including Mr. Malackowski’s expert report–and, to the extent that the court allowed it, Mr. Malackowski’s revised report served on February 27, 2016.”
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