Patent Damages

35 U.S.C. § 287(a) and the Burdens of Providing Notice for Pre-Suit Damages: Packet Intelligence LLC, v. Netscout Systems, Inc.

In Packet Intelligence LLC, v. Netscout Systems, Inc. the Federal Circuit reversed a jury determination for pre-suit damages, and vacated an enhancement of such damages, for Netscout’s infringement of U.S. Patent 6,665,725, U.S. Patent 6,839,751, and U.S. Patent 6,954,789, all owned by Packet Intelligence. The patents at issue were all directed to monitoring packets exchanged over a computer network. The ‘798 patent includes system claims, and the ‘725 and ‘751 patents include method claims. It was important in this case that infringement of the various system and method claims have different requirements to qualify for pre-suit damages. Pre-suit damages for the system claims are controlled by the marking requirements of 35 U.S.C. § 287(a), whereas pre-suit damages for the method claims are not. With respect to the method claims of the ‘725 and ‘751 patents, Packet Intelligence argued that evidence of direct infringement of the ‘725 and ‘751 patents was sufficient to merit an award of damages for pre-suit activities. Direct infringement would require the method of the patent claims to actually be practiced, i.e., the steps of method actually performed. However, NetScout’s primary activity was to sell and license software, and, as the Federal Circuit pointed out, method claims… Read More »35 U.S.C. § 287(a) and the Burdens of Providing Notice for Pre-Suit Damages: Packet Intelligence LLC, v. Netscout Systems, Inc.

Willful Infringement Allegations Require More Than Conclusory Statements

In a recent decision from the United States District Court for the District of Nevada, the court granted a motion to dismiss willful infringement allegations for lacking plausible factual allegations. IP Power v. Westfield , No. 2:19-cv-01878-MMD-NJK (D. Nev. June 4, 2020). This case centers around U.S. Patent No. 6,817,671, which is directed to a collapsible, reclining camp chair with a footrest and cupholders.  The plaintiff sued the defendant after multiple correspondences were exchanged between the parties.  In its complaint alleging patent infringement, the plaintiff also asserted that the defendant engaged in conduct rising to the level of willful infringement.  The defendant filed a motion to dismiss the willful infringement allegations, and the defendant’s argument centered on a single paragraph in the complaint.  That paragraph recited that: In addition, it is believed that [defendant] knew of the 671 Patent and/or licensed products before [defendant] developed its Accused Instrumentalities and copied the patented features from the 671 Patent and/or licensed patented products into the Accused Instrumentalities. Furthermore, [defendant] had actual or constructive knowledge of the 671 Patent and its infringement prior to the filing of this Complaint. At least as of March 22, 2019, [plaintiff] informed [defendant] that [defendant]’s Reclining Camp… Read More »Willful Infringement Allegations Require More Than Conclusory Statements

No Attorney Fees for § 101 Dismissal: Data Scape Ltd. v. Spotify USA Inc.

Despite a refiled case and a subsequent dismissal for ineligible subject matter, plaintiff Data Scape escaped paying attorney fees to defendant Spotify in a recent decision from the Central District of California.  Data Scape Limited v. Spotify USA Inc. et al., No. CV 19-4367 PSG (SKx) (C.D. Cal. Dec. 3, 2019). Data Scape is apparently a patent assertion entity, and Spotify is a well-known music streaming service. Spotify successfully convinced the district court to dismiss Data Scape’s claim for patent infringement, and then Spotify filed a motion for sanctions, the subject of this decision. Because Spotify’s motion is based on Data Scape’s litigation conduct, the timeline of events is important. The dispute began with Data Scape filing an earlier suit for infringement of U.S. Patent Nos. 9,712,614; 9,380,112; 7,720,929; and 7,617,537, all in the same family. Spotify moved to dismiss the suit under § 101 for ineligible subject matter. Instead of filing a response, Data Scape filed an amended complaint. Spotify followed up with another motion to dismiss on much the same grounds. Three days before a response was due, a different judge in the same district dismissed a case filed by Data Scape against a different defendant, Western Digital,… Read More »No Attorney Fees for § 101 Dismissal: Data Scape Ltd. v. Spotify USA Inc.

Another Unsupported Patent Royalty Rejected

Expert testimony on patent royalties that is unsupported by evidence is excluded. Dominion Assets LLC v. Masimo Corp., Case No. 14-cv-03002 (N.D. Cal. Aug. 1, 2018). Plaintiff Dominion alleged infringement by Defendant Masimo of U.S. Patent Nos. 5,379,764 and 5,460,177, which are directed to radiation measurement techniques for blood concentration. Dominion presented expert testimony on a reasonable royalty. Masimo filed a motion to exclude the expert’s testimony as (1) failing to rely on a license agreement that is economically comparable to the patented invention, (2) failing to apportion damages to the allegedly infringing features, and (3) failing to tie the royalty rate to the facts of the case. The Court agreed with Masimo, excluding Dominion’s expert testimony on damages. On the license agreements, the expert relied on settlement agreements between Masimo and a third party. The agreements involved Masimo’s revolutionary technology. Dominion purchased the asserted patents out of bankruptcy cheaply and had not developed any products. The Court noted the expert’s fundamental economic flaw: comparing the highly-valued Masimo technology to the low-valued patents. Further, the Court noted that the expert’s opinion was unreliable because the agreements covered a portfolio of patents, and not the single claim asserted by Dominion. Finally, the… Read More »Another Unsupported Patent Royalty Rejected

Non-Patented Features and the Entire Market Value Rule

Evidence that a patented feature drives customer demand is insufficient to justify damages under the entire market value rule (EMVR) when non-patented features may drive customer demand. Power Integrations, No. 2017-1875 (Fed. Cir. July 3, 2018). The Federal Circuit vacated a damages award for patent infringement from a jury that relied on the EMVR, noting that while the plaintiff showed that the patented feature drove demand of the accused products, the plaintiff did not show that valuable features of the accused products were not relevant to customer demand. Plaintiff Power Integrations sued Defendant Fairchild for infringement of U.S. Patent Nos. 6,212,079 and 6,538,908, directed to power supply controller chips. A jury found infringement of the ‘079 patent and awarded a reasonable royalty of $139.8 million. The jury’s award was based on Plaintiff’s expert testimony of EMVR. In general, damages are apportioned to the patented feature of the accused product. In a multi-component accused product, the royalty is limited to the smallest salable unit embodying the patented invention. However, when the plaintiff shows that the patented feature is the sole driver of customer demand, the plaintiff can ask for a royalty based on the entire product under the EMVR. Relying on… Read More »Non-Patented Features and the Entire Market Value Rule

Reasonable Patent Royalties Require Proper Apportionment

Damages for patent infringement must be apportioned to the infringing features of an accused product and supported by substantial evidence. Finjan, Inc., v. Blue Coat Systems Inc., No. 2016-2520 (January 10, 2018) (precedential). After considering subject matter eligibility and infringement of the asserted patents, the Federal Circuit reviewed the damages awarded by the jury, reversing awards unsupported by substantial evidence and affirming awards properly apportioned. Finjan asserted U.S. Patent Nos. 6,154,844, 6,965,968, 7,418,731, and 7,647,633, and the district court found infringement by Blue Coat for all four patents.  Upon reversing the infringement verdict of the ‘968 patent and affirming the infringement verdicts of the ‘844, ‘731, and ‘633 patents, the Court reviewed the damages awards for substantial evidence. Damages for patent infringement are limited to those “adequate to compensate for the infringement.” 35 U.S.C. § 284. Finjan asked for a reasonable royalty, which includes a royalty base (here, the smallest identifiable technical component) and a royalty rate (here, a dollar amount based on sales of the accused product). Blue Coat’s accused product, WebPulse, is a cloud-based system that associates URLs with a plurality of categories, e.g., gambling, shopping, and malware. WebPulse uses a “dynamic real-time rating engine” (DRTR) for analyzing… Read More »Reasonable Patent Royalties Require Proper Apportionment

Detail Counts to Support Patent Damage Analysis

In Yodlee v. Plaid Technology, No. 14-1445-LPS-CJB (D. Del. 2017), Judge Leonard Stark gave guidance on the boundaries of an admissible opinion for a reasonable royalty analysis in a patent case.  Yodlee v. Plaid involves a patent relating to a method and apparatus for gathering summary information from websites and presenting that information as HyperText Markup Language.  The Plaid software used a different pricing model and included features in addition to those allegedly covered by the patents in suit.  Yodlee offered damage theories for both lost profits and reasonable royalties through damages expert Mark Robinson. Judge Stark’s comments on Mr. Robinson’s reasonable royalty analysis is interesting with respect to apportionment and profit splitting. The apportionment requirement mandates that an expert apportion defendants profits between patented and unpatented features.  Erricsson, Inc. v. D-Link Sys. Inc., 773 F.3d 1201 (Fed. Cir. 2014).  In his expert report, Mr. Robinson attributed the patents contribution at 60%.  Plaid argued that this was arbitrary.  In response, Yodlee referenced Mr. Robinson’s analysis of the functionality of the accused product.  Judge Stark was unpersuaded by Mr. Robinson’s apportionment analysis.  Judge Stark held that Mr. Robinson’s analysis was deficient as he relied on witnesses not listed in Yodlee’s Rule… Read More »Detail Counts to Support Patent Damage Analysis

Damages for Design Patent Infringement: What Is an “Article of Manufacture?”

On December 6, 2016, the U.S. Supreme Court issued its long awaited decision in Samsung Electronics Co. v. Apple Inc.  The issue in Samsung v. Apple was whether 35 U.S.C. § 289 requires that design patent damages of a multi-component product must always lie in the end product sold to the consumer.  The Court, in a unanimous decision, held that the term “article of manufacture” as used in § 289 does not mean only the end product sold to the consumer, but can mean a smaller component part – even where the component part is not available for separate purchase.  In so doing the U.S. Supreme Court reversed Apple’s $399 million award for design patent infringement. The design patents in the Samsung v. Apple litigation related to the appearance of the exterior of a smart phone.  The jury found that Samsung infringed those design patents and awarded Apple the total profits made by Samsung, $399 million.  The controlling statute for design patent infringement is 35 U.S.C. § 289, which states: Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture… Read More »Damages for Design Patent Infringement: What Is an “Article of Manufacture?”

Determining Willful Patent Infringement: Ramifications of Halo Pulse Through the Courts

The Federal Circuit recently vacated and remanded a lower court’s holding that a patent infringement defendant could not have willfully infringed as a matter of law. Alfred E. Mann Found. for Sci. Research v. Cochlear Corp. (Fed. Cir. Nov. 17, 2016).  The lower court’s decision was based on the objective standard prong of the now defunct two-part test of In re Seagate; the Federal Circuit, in the course of also deciding issues of infrnigement and validity, remanded the willful infringement finding in light of Halo Electronics, Inc. v. Pulse Electronics, Inc. A jury had returned a verdict including a finding of willful infringement by Cochlear, and awarded approximately $131 million in damages. In response to the verdict, Cochlear filed a motion for JMOL of no willful infringement. The lower court granted the motion, concluding that a reasonable jury could not find that the objective prong of the Seagate test was established by clear and convincing evidence, and that Cochlear had presented several reasonable non-infringement defenses. Subsequent to the determination of no willful infringement as a matter of law by the Alfred lower court, the U.S. Supreme Court decided Halo Electronics, Inc. v. Pulse Electronics, Inc., altering the test for willful… Read More »Determining Willful Patent Infringement: Ramifications of Halo Pulse Through the Courts

Patent Damages Must Be Supported by Substantial Evidence

Judge Gilstrap of the Eastern District of Texas granted a new trial on damages after Core Wireless (“Core”) was awarded a $3.5 million judgment against LG Electronics (“LG”) for infringement of U.S. Patent Nos. 8,434,020 and 8,713,476. Core Wireless Licensing v. LG Electronics, No. 2:14-cv-911-JRG (E.D. Tex. Aug. 23, 2016).  In granting LG’s motion under Federal Rule of Civil Procedure 59 for a new trial on damages (among a number of post-trial motions that the court considered), the court found that the damage award was not supported by substantial evidence. To grant a new trial under Rule 59, the court may find “the verdict is against the weight of the evidence, the damages awarded are excessive, the trial was unfair, or prejudicial error was committed in its course.” The court must ensure that a jury’s award is supported by substantial evidence, and will grant a new trial when a jury’s damages award is clearly not supported by the evidence. Core sought a reasonable royalty and provided testimony from a damages expert based on the value of the Android phones sold by LG at the time of an April 2013 hypothetical royalty negotiation. The expert used an estimated value of the… Read More »Patent Damages Must Be Supported by Substantial Evidence