Articles Posted in Damages

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Zurn Industries, Inc. (“Zurn”) moved to exclude Sloan Valve Company’s (“Sloan”) consultant witness and other testimony based on the consultant’s investigation. The patent-at-issue, U.S. Patent No. 7,607,635, entitled “Flush Valve Handle Assembly Providing Dual Mode Operation” (the “‘635 Patent”), pertains “to flush valves for use with plumbing fixtures such as toilets, and more specifically to improvements in the bushing of the actuating handle assembly that will provide for user-selectable, dual mode operation of the flush valve.” As explained by the district court, the improvement is a mechanism that allows a user to select one of two flush volumes based on the direction of actuation of the handle: a full flush volume to evacuate solid waste from the bowl or a reduced flush volume to remove liquid waste.

The district court explained that Sloan hired Leone Flosi of Quest Consultants Int’l Ltd. (“Quest”) to perform an investigation of bathrooms containing either Sloan or Zurn manual dual flush valves and handles at Sloan’s damage expert, Mr. Bero’s, direction. Specifically, Sloan hired Mr. Flosi and Quest to “assist in estimating the ratio of collateral product sales relative to manual dual-flush flushometer valves.” Mr. Bero used this data to project and calculate the profits that Sloan allegedly lost on collateral sales of unpatented products.
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Orbit Irrigation Products (“Orbit”) filed a patent infringement action against Sunhills International (“Sunhills”). After the completion of certain discovery, Sunhills filed a motion to compel. Sunhills contended that Orbit had failed to provide a computation of damages as required by Federal Rule of Civil Procedure 26 and failed to produce its documents related to its damages. As a result, Sunhills asked the district Court to bar Orbit from introducing any evidence related to damages beyond that already produced.

In its disclosure and in discovery, Orbit claimed that it suffered $19 million in damages. The court explained that “[o]n its face Rule 26 requires Orbit to provide Sunhills both with a computation of each category of damages it claims and with the non-privileged documents on which it bases those calculations. Orbit asserted a fixed number for damages suffered from price compression ($19 million) as compared to the lack of any concrete number offered for reputational damages. Sunhills has a right to know from the outset how Orbit reached that number. Such disclosure does not prevent a party from changing theories as the case proceeds.”
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Protegrity Corporation (“Protegrity”) filed a patent infringement action against Voltage Security, Inc. (“Voltage”)over patents that allegedly cover methods, systems and apparatuses for encrypting electronic data. Protegrity asserted that its patents are infringed by products sold by Voltage and it sought lost profits as damages. Voltage moved for summary judgment on the issue of lost profits arguing that even if infringement could be established, Protegrity could not sustain its burden of proving that it has lost sales to Voltage because its expert failed to address whether there were non-infringing alternatives available in the market.

In response to the motion, Protegrity sought additional discovery in order to postpone consideration of the motion. As explained by the district court, “Protegrity seeks to postpone consideration of Voltage’s motion for summary judgment under Fed. R. Civ. P. 56(d) pending a deposition of Voltage on issues relating to lost profits. Voltage opposes Protegrity’s request for a postponement on the grounds that Protegrity has not identified the information it hopes to obtain, nor shown how the information will raise a genuine issue of material fact regarding Protegrity’s claim for lost profits.”
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In February 2013, Tomita Technologies USA, LLC (“Tomita”) went to trial before a jury against Nintendo Co., Ltd. (“Nintendo”). In March 2013, the jury returned a verdict in favor of Tomita in the amount of $30.2 million, finding that the Nintendo 3DS infringed one of Tomita’s patents. The jury also found that the Tomita patent was not invalid. The district court also ruled that Tomita had not proven that Nintendo willfully infringed the Tomita patent by clear and convincing evidence.

After judgment was entered in favor of Tomita, Nintendo moved to set aside the judgment or, in the alternative, for a remittitur. The district court then awarded a remittitur to Nintendo for half of the damages awarded by the jury, which Tomita accepted.
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As Cassidian Communications, Inc.’s (“Cassidian”) patent infringement case against Microdata GIS, Inc. (“Microdata”) moved toward trial, Cassidian moved to exclude the testimony of defendants’ expert. The motion to exclude was based on the argument that the expert report was fatally flawed in that it calculated a reasonable royalty based on an incorrect hypothetical negotiation date.

The district court found that Mr. Gallagher’s expert report is fatally flawed, in that it calculates reasonable royalty based on an incorrect hypothetical negotiation date in November 2010 – almost two years after the date infringement began in December 2008. See LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 75 (Fed. Cir. 2012) (“[T]he correct determination of the hypothetical negotiation date is essential for properly assessing damages.” “In general, the date of the hypothetical negotiation is the date that the infringement began.”).
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Rembrandt Social Media, LP (“Rembrandt”) filed a patent infringement action against Facebook alleging that Facebook infringed two of its patents, U.S. Patent No. 6,415,316 (“the ‘316 patent) and U.S. Patent No. 6,289,362 (“the ‘362 patent”).In 2009, Facebook introduced two new features to its website called BigPipe and Audience Symbol. Rembrandt’s expert admitted that the alleged infringement of the patents-in-suit is because of to the introduction of these two features in 2009. Rembrandt’s expert also admitted that Facebook does not infringe without BigPipe and Audience Symbol features.

As explained by the district court, “BigPipe, introduced in Fall 2009, is a web page acceleration and optimization computer program developed by Facebook to increase the speed at which certain web pages are delivered from Facebook’s servers to the user’s web browser. BigPipe takes a web page and divides it into portions known as “pagelets” using a certain piece of computer code12 to specify each pagelet.” In addition, “Audience Symbol, introduced in June 2009, is a small icon displayed next to stories on various webpages on Facebook’s website. The symbol signifies the third-party users, or “audience,” allowed to view a particular story. Rembrandt alleges that display of Audience Symbol violates both the ‘316 and ‘362 patents.”
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As Apple and Samsung prepare for a new trial on damages, Apple filed a motion to exclude part of the damage calculation set forth in Samsung’s updated expert report on damages. In particular, Apple moved to exclude the damage calculation pertaining to the Samsung Gem phone on the ground that these calculations are based on fewer sales than were originally included in the 2012 expert report. The 2012 expert report calculated damages for the Gem based on total sales and the new report calculated sales only for Gem phones sold through Verizon. Samsung asserted that the updated damages calculations were proper because Apple presented evidence of infringement only for Gem phones sold through Verizon at the 2012 trial and Apple therefore failed to meet its burden to prove its entitlement to damages for Gem phones sold through other carriers.
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As this patent infringement action moved closer to trial, the parties filed various motions in limine, including defendant Fortinet Inc.’s motion to strike the report and expert testimony of Network Protection Sciences, LLC’s (“NPS”) damage expert. In its motion to strike, Fortinet contended that the damage expert’s analysis improperly based royalties on the entire market value of the accused products.

To analyze the motion to strike, the district court summed up the entire market value rule as follows: “The entire market value rule — which has varied somewhat in formulation over time — has been a highly-criticized and highly-litigated methodology. In recent years, the Federal Circuit has restricted its use, most notably in LaserDynamics v. Quanta Computer, Inc., 694 F.3d 51, 67 (Fed. Cir. 2012). In that action, the Federal Circuit explained it as follows (per Judge Jimmie Reyna):
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In this patent infringement action, the patent owner sought a reasonable royalty in the form of a lump sum payment. HTC filed a Daubert motion to exclude the expert’s opinion on the ground that the lump sum royalty impermissibly included the entire market value.

The district court began its analysis with a commentary on Daubert motions in patent cases. “Another patent case on the eve of trial, another Daubert motion to strike a patent damages expert’s testimony. The undersigned only recently observed that such motions have become a routine affair in patent litigation. And yet, as routine as the motion has become, skilled experts continue to fashion new theories prompting additional lines of attacks. In short, no two motions are quite the same.”
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Carnegie Mellon University (“CMU”) filed a patent infringement action Marvell Technology Group and Marvell Semiconductor, Inc. (“Marvell”) that alleged infringement of two CMU patents. The jury rendered a verdict in favor of CMU, finding that Marvell infringed the patents, that the patents were valid and that there was willful infringement. The jury also awarded damages in excess of $1.1 billion.

Marvell filed several post-trial motions, including one for judgment as a matter of law or, in the alternative, for a new trial on damages. Marvell also argued for a mistrial based on certain of CMU’s counsel’s statements during closing argument and throughout the trial. After reciting the standard for granting a new trial, the district court addressed the specific issues raised by Marvell.
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