Tag: CAFC

Finjan, Inc. v. Blue Coat Systems, Inc. Decided January 10, 2018

Today, the CAFC offered an opinion on Finjan v. Blue Coat Systems.  In August 2015, a jury determined that Blue Coat owed approximately $39.5 million for its infringement of several of Finjan’s patents.  For one patent, the CAFC found that Finjan’s expert failed to apportion, and failed to demonstrate the technological and economic comparability of the license on which she relied.

Regarding the failure to apportion, the CAFC cites to VirnetX and Ericsson stating,

Regarding the failure to establish comparability, the CAFC states:

With regard to damages concerning two other patents, Finjan’s expert was found to have properly apportioned revenue using the equal-apportionment methodology described below:

The CAFC explains that her quantification was supported by: 1) a document which suggested that there were 24 functions of the accused product, and 2) conversations with experts and witnesses who told her that the 24 functions were of equal value.  Despite evidence that Blue Coat provided contradicting this equal division by 24, the CAFC concludes that the jury heard conflicting testimony and was entitled to make up its own mind.

For damages experts, however, it remains unclear precisely where the evidentiary threshold supporting “function analysis” lies; and thus, when one might pursue equal-apportionment to derive a royalty base.

We note that Finjan and Blue Coat are currently back in court.  Attached is Judge Freeman’s most recent order on motions in limine.

Texas Advanced Optoelectronic Solutions v. Intersil Corp. (CAFC Oral Argument Jan 2018)

The CAFC listened to oral argument in the TAOS v. Intersil matter in January 2018.  At the forefront of the discussion was the question of whether disgorgement should be considered an equitable remedy or a legal remedy, and whether net or gross profits should have been used.

In 2015, the Texas jury awarded TAOS for the misappropriation of its trade secrets over $48 million as disgorgement of the Defendant’s gross profits.  Judge Snell issued final judgment stating, “The Plaintiff shall recover from the Defendant prejudgment interest in the amount of $18,377,159.00 on the jury’s award of $48,783,007.00 for the misappropriation of the Plaintiff’s trade secrets.”

In the oral argument, Intersil argued that the disgorgement award should not have been determined by the jury.  Citing to two Fifth Circuit cases, ERI Consulting Engineers, Inc. v. Swinnea and MGE UPS Sys., Inc. v. GE Consumer & Industrial, Intersil said this was an equitable issue.  It was not appropriately categorized as a “damage” because TAOS never asked for lost profits, nor ever suggested that TAOS lost sales as a result of the misappropriation.

TAOS argued that the Supreme Court ruling in Dairy Queen should be followed and that the jury’s award should be preserved.

Intersil also argued that the award should not have relied on gross profits, but instead on net profits.  A recent 5th Circuit case, Motion Medical Technologies v. Thermotek Inc., affirmed a judgment which vacated a lost profits jury award (for fraud) calculated using defendant’s gross profits instead of net profits.

The appropriate measure of any party’s economic benefit is a cornerstone for sensible damages.  Reliance in this case on “gross profit” (which is formally defined as Net Sales – Cost of Goods Sold) inexplicably may ignore the other expenses (e.g., selling, general & administrative… a.k.a., “SG&A”… a.k.a., “operating expenses”) that the party required to place its product successfully in the marketplace.

The oral argument may be found here (start at 7:30 and when you get tired of listening, move to 30:00):

 

Trustees Of Boston University v. Everlight Electronics Co. (CAFC oral argument 12/8/17)

This case was originally filed in 2012 in Massachusetts.  The case went to trial and BU won on infringement and validity, with the jury awarding damages in the form of a fully paid-up lump sum.  On the jury verdict form, the jury chose a one-time payment for the life of the patent, as opposed to a running royalty rate based on sales.

The interesting question for damages came in post-judgment motions, when BU asked for prejudgment interest. BU argued such interest should accrue from the date of the hypothetical negotiation (i.e., January 2000), rather than from the point in time six to twelve years (for the three defendants) later, when notice occurred and damages began to accrue.

In her opinion, Judge Saris explained that since damages could not accrue until after the hypothetical negotiation, prejudgment interest could also not accrue until notice occurred.  Her conclusion was based largely upon BU’s lack of supporting case law:

On December 8, 2017, the CAFC heard oral arguments on the issue (N.b., the relevant argument begins at 29 minutes & 30 seconds into the recording available below).  The prejudgment interest case discussed was Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983).  Counsel for BU argued that the case supports the notion that lump-sum damages awarded by a jury should accrue interest from the hypothetical negotiation.  It will be interesting to read the Court’s eventual opinion on this specific issue.

Arctic Cat v. Bombardier Rec. (December 7, 2017)

The CAFC issued this opinion regarding marking, ongoing royalties, willfulness and damages.  The court reviewed the Daubert motion and found that the court did NOT err in NOT excluding the expert analysis which involved comparing an infringing product to a non-infringing product.  Citing Apple v. Motorola the CAFC opined that, “factually attacking the accuracy of a benchmark goes to evidentiary weight, not admissibility.”

The initial rulings on the Daubert Motions and Motions for Summary Judgment are good reads as well.

Georgetown Rail v. Holland (August 16, 2017)

The CAFC issued an interesting opinion which touched on some issues that arise in lost profit matters. The case provides a good meta-analysis of the lost profits damages requirements and summarizes where the case law on lost profits damages stands.

An important consideration in any lost profits analysis is an actual demonstration of causality; specifically, “reliable economic evidence of but for causation.”  The opinion states:

The opinion also identifies the Panduit test as a “useful but non-exclusive” method to derive lost profits.  The discussion in this matter is echoed by Calico Brands.

Carnegie Mellon v. Marvell (August 4, 2015)

The CAFC issued an interesting opinion which affirmed a $0.50 per unit sold royalty rate but did not allow that rate to be applied to products made and used outside of the United States.

This case is particularly interesting because it appears to touch on the current thinking on the book of wisdom. It also suggests (as have other cases in the past) that the time of the hypothetical negotiation is of paramount importance. The opinion reviews several issues regarding expert qualifications, royalty calculations, and enhanced damages.

Here is a quote from the opinion citing to the recent AstraZeneca case:

Westerngeco v. Ion Geophysical (July 2, 2015)

The opinion discusses several damages issues, including extraterritorial reach of patent damages, specifically limitations of that reach.  It also discusses the exclusion of a damages expert who opined that the royalty rate should be 4 times the price of the accused items.  Specifically the CAFC noted that the exclusion of the expert was merited given that:

This case provides a potential cap on damages and thus a response to Stickle v. Heublein where damages may be higher than an infringer’s profit and higher than the price set on the infringing product.