Landmark Patent Damage Awards?
posted by David Opderbeck
Thanks for this opportunity to blog here at Concurring Opinions. On the eve of the Presidential election, I’d like to start with something that’s surely high on everyone’s priority list: patent reform. Well ok, it might not rank up there with the economy and the war, but some of us find it interesting.
Much of the debate about patent reform focuses on two related concerns: (a) the size of awards, particularly for “component” patents; and (b) non-practicing entities or “patent trolls.” This post discusses recent “landmark” awards that are often cited as examples of a system that is spinning out of control.
A recent PriceWaterHouseCoopers study widely cited by reform advocates suggests an alarming trend towards $100 million-plus verdicts in recent years. A closer look at the PwC study, however, suggests that things might not be so dire as reform advocates suggest. In fact, most of these “landmark” cases were extraordinarily complex, long running disputes by fierce market competitors involving multiple patents and other claims.
For example, the $133 million patent verdict in favor of Rambus, Inc. against rival memory and chip maker Hynix, Inc. was part of a corporate war that involves 59 claims from 14 Rambus patents as well as antitrust and other claims. Similarly, the Alcon v. Advanced Medical Optics $121 million verdict was awarded in one of four patent infringement cases brought by Advanced Medical against Alcon, leading competitors in the medical device and pharmaceutical products industry. The dispute eventually was settled in a package deal for a lump-sum payment by Alcon of $121 million.
In some of the cases, the post-trial and appellate processes changed the result. The largest and most discussed award, a $1.5 million jury verdict against Microsoft in favor of Alcatel-Lucent on a patent relating to MP3 audio technology, was overturned by the trial court on post-trial motions. And in Verizon v. Vonage, the federal circuit vacated the judgment of infringement with respect to one of the three patents in suit based on an erroneous claim construction, and vacated the damage award entirely, because the jury did not allocate the award among the three different patents. The Federal Circuit also vacated the finding of infringement, and therefore the $115 million damage award, in Finisar v. Directv. Thus, three out of the six $100 million-plus damage awards from 2005 to 2007 involving the computer and telecommunications industries were overturned.
My verdict: the rhetoric about runaway patent verdicts is overblown.
November 3, 2008 at 12:44 pm
Posted in: Intellectual Property
Print This Post
Leave a Reply