Judge Payne of the Eastern District of Texas vacated a jury verdict awarding Ericsson a lump sum of $75 million for infringement of its ‘510 patent by TCL Communication. Noting “for reasons stated in a contemporaneous order” (which appears not to be on the PACER docket yet), Judge Payne decided that Plaintiff expert Robert Mills’ damages analysis – partially adopted by the jury – was not acceptable as a matter of law.
From defendant’s motion for judgment as a matter of law, it appears Mr. Mills relied upon sales forecasts which included products not accused of infringing. Further, he relied upon a survey expert who did not tie analysis to the claimed invention. He is also accused of violating the entire market value rule. Finally, Mr. Mills is accused of failing properly to discount his damages analysis back to the date of the hypothetical negotiation, having instead discounted back to the date of notice (i.e., that date damages began to accrue). All but the ultimate issue regarding discounting seem sound reasons for vacating a jury award.
This last alleged transgression is most interesting, however, because it is unclear which date might make most sense for discounting a damages value. Mr. Mills appears to have derived a lump-sum damages award using a hypothetical negotiation construct. The award appears to be based upon past and future (expected) infringement. Mr. Mills then adjusted his lump sum back to the date damages should begin to accrue based upon notice. The JMOL legal argument claims, in contrast, that he should have discounted the award back to the date of the hypothetical negotiation (which was years before the notice date):
The citation above to Wang Labs, Inc. v. Toshiba Corp. appears unrelated to the specific issue of discounting. Similarly, LaserDynamics addresses an issue unrelated to discounting a royalty payment. In both those cited cases, the expert failed to assess a reasonable royalty at the time of the hypothetical negotiation, and instead used the date damages began to accrue as the hypothetical negotiation date. This appears to be different from what Mr. Mills did. Defendants are not arguing that Mills used the wrong hypothetical negotiation date: rather, they are arguing that his proffered lump-sum damages should have been discounted to the date of the hypothetical negotiation. Judge Payne’s order, however, does not elaborate on which of the defendant’s arguments he found persuasive; nor does it afford guidance with regard to the specific issue of proper discounting.