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  • Patent Damages: The Success and Failure of a Theory

    December 2, 2015

    Litigation Webinar Series: INSIGHTSOur take on litigation and trial developments across the U.S.

    Chris MarchesePrincipal, Southern California

  • Overview

    INSIGHTS Litigation Webinar Series


    INSIGHTS Series

    Key Developments & Trends


    CLE Contact: Jane Lundberg


    Upcoming Webinars

    Watch for our 2016 webinar

    schedule at

  • Agenda


    1. Background research

    2. Apportionment

    3. Comparable licenses

    4. Extraterritorial issues

    5. Book of wisdom

  • Background Research


    What weve done

    Reviewed 100s of district court cases from the past 3+ years

    Identified cases involving todays topics

    Tried to distill themes, trends, and successful approaches

  • 5


  • Apportionment



    Apportionment is hotbut unsettled

    No silver bullets

    Depth of apportionment

    Few bright line rulesexcept:

    Apportionment required without proving EMVR

    SSPPU no longer the end point of apportionment

    Rate decreases do not justify an expanded base

    Base must be tied to the inventions footprint

  • Apportionment



    Evidence, evidence, evidence

    Damages expert

    Technical expert

    Subsidiary experts (e.g., survey)

    Fact testimony (plaintiff and defense


    Documents (especially from the


    Third parties

    Piggybacking experts

  • Apportionment



    Creative approaches

    Multiple theories, backstops


  • Apportionment



    Synergistic claims Astrazeneca/Varian

    Big claims with novel & conventional features

    Show synergy between the novel & conventional features

    Similar to convoyed sales functional unit test

    Allows damages on patented and unpatented items

    Avoid apportionment?


  • Apportionment


    Trends: synergistic claims

    Astrazeneca v. Apotex, 782 F.3d 1324, 1338-39

    (Fed. Cir. 2015)

    Claims covered omeprazole pill No EMVR

    Inquiry shifts to conventional claim elements:

    Account for the patented feature relative to the

    value of the conventional elements recited in the

    claim, standing alone.

    BUT: It is not the case that the value of all

    conventional elements must be subtracted from

    the value of the patented invention as a whole

    when assessing damages.

    Novel subcoating sufficiently important not to

    exclude conventional drug core from royalty


    Claim:-Drug core

    -Inert water soluble


    -Enteric coating

  • Apportionment


    Trends: synergistic claims

    Univ. of Pittsburgh v. Varian, 2:08-cv-01307-AJS (W.D. Pa.

    Feb. 10, 2012), affd in relevant part, 561 Fed. Appx 934

    (Fed. Cir. 2014) (non-precedential)



    RPM system

  • Apportionment


    Trends: synergistic claims

    Varian cont:

    Federal Circuitnon-precedential

    Even with conventional dependent element, if inventive

    feature adds value to that conventional element,

    damages may reflect that value.

    Astrazeneca, 782 F.3d at 1339 n.5:

    In Varian, we declined the defendant's invitation to

    remove the conventional elements from the overall

    value of the combination apparatus; we noted that

    guarding against compensation for more than the

    added value attributable to the invention is precisely

    what the Georgia-Pacific factors purport to do.

    (quoting Varian)



    RPM system

  • Apportionment


    Trends: district courts and expansive claims

    SimpleAir, Inc. v. Google Inc., Case No. 2:14-CV-11 (E.D. Tex. 10/5/15) (Gilstrap, J.)

    Dispute over use of phones vs. app in damages computation

    Court: claims included phone plus central broadcast server, information gateway, and transmission gateway

    Court: Whether some other unit would provide a more perfect estimation of value goes to the weight of the evidence, not its admissibility.

    ThinkOptics v. Nintendo, Case No. 6:11-cv-455 (E.D. Tex. 6/21/2015) (Davis, J.)

    Patent prosecution: all but 3 claim elements conventional

    Defense expert: excluded conventional elements from base

    Court: exclusion of claim elements does not carefully tie the proof of damages to the claimed inventions footprint in the market place.


  • Apportionment


    Trends: district courts and expansive claims

    Cave Consulting Group v. Optuminsight, Inc., Case No. 5:11-

    cv-00469- EFD (N.D. Cal. 2/20/15) (Davila, J.) (allowing

    defendants expert to apportion only for claimed novel


    Labyrinth Optical Tech. v. Alcatel-Lucent USA, Case No.

    SACV 12-0759 AG (MLGx) (C.D. Cal. 3/10/15) (Guilford, J.)

    Denying attempt to use larger product (line card) as royalty

    base where claim recited steps performed at the front end of the

    line card

    It is often the case that patent claims will be written to require

    the presence of, or an input from, a portion of a device that is

    not the focus of the claim.

  • Apportionment


    Trends: synergistic claims

    What does this mean going forward?

    Premium on claim/spec drafting in prosecution

    Broad array of claims

    Different types

    Different scope (narrow to expansive)

    Deep dependent claims

    Premium on patent/claim selection in litigation

  • Apportionment


    Success/failure in apportioning

    Reviewed many cases involving apportionment

    Many do not provide visibility into the methodology

    Following slides address cases that did

  • Apportionment


    Success/failure in apportioning

    Method #1: Feature counting & isolation

    Mixed bag worked in the cases reviewed

    5 failures

    2 provisional failures (do-over allowed)

    7 successes

    Common themes

    Straight up division is problematic (without justification)

    Need relative importance

    Survey (scaled to importance of feature; binary problematic)

    Technical expert

    Defendants documents

    Third party market research


    Apportion out non-patent attributes (e.g., brand, reputation)?

  • Apportionment


    Success/failure in apportioning

    Method #2: Related product comparison

    Worked 4 out of 4

    Including Apple Inc. v. Motorola, Inc., 757

    F.3d 1286 (Fed. Cir. 2014)

    Limited availability

    Find comparable product without patented


    Determine delta to patented product

    Isolate the patented feature

    If multiple features in delta, account for the

    relative value of each such feature and

    patented feature

    Again, straight division may be


  • Apportionment


    Success/failure in apportioning

    Method #3: Real estate approach

    E.g.: lines of code, chip coverage

    Worked 3 out of 3 (one was trade secret)


    Mere add up is dangerous

    Account for relative value of the

    patented real estate

    Technical expert can help

    Defendants documents may help

  • Apportionment


    Success/failure in apportioning

    Method #4: Blaming the defendant

    Failed 2 out of 2

    Courts: burden of proof on patentee

  • 21

    Comparable Licenses

  • Comparable Licenses



    Comparability is a threshold question

    Extent of comparability goes to weight

    Some guidance

    Technical experts must establish technical comparability if the

    licenses cover different patents

    Litigation settlements are not always excluded

    Timing of the comparable license has not been a factor

    Converting lump sum licenses into an effective royalty rate

    requires more than simple division

    When accounting for differences, show your work

    Comparable licenses must be disclosed

  • Comparable Licenses



    Lets give it a go

    Concerns are left to cross examination

    Multiple theories, even among the licenses


  • Comparable Licenses



    Accounting for differences

    The Federal Circuit has never required identity of

    circumstances. Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d

    1308, 1330 (Fed. Cir. 2014).

    Reasonable royalty calculations must account for differences

    in the technologies and economic circumstances of the

    contracting parties. Finjan, Inc. v. Secure Computing Corp.,

    626 F.3d 1197, 1211 (Fed. Cir. 2010).

    The fact that a license is not perfectly analogous generally

    goes to the weight of the evidence, not its admissibility.

    Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1227 (Fed.

    Cir. 2014).

  • Comparable Licenses



    Accounting for differences

    Same or different patent(s)

    Scope of the license

    World-wide v. US only

    Use of patented methods v. More benefits

    Exclusive v. Non-exclusive