Apportioning Patent Damages: Analysis, Calculations for Multi...

Apportioning Patent Damages: Analysis,

Calculations for Multi-Component

Products, Impact of Claim ScopeImplications of Apportionment for Patent Drafting, Licensing and Enforcement

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 1.

THURSDAY, DECEMBER 6, 2018

Presenting a live 90-minute webinar with interactive Q&A

Timothy P. McAnulty, Partner, Finnegan Henderson Farabow Garrett & Dunner, Washington, D.C.

Jeffrey C. Totten, Partner, Finnegan Henderson Farabow Garrett & Dunner, Washington, D.C.

Tips for Optimal Quality

Sound Quality

If you are listening via your computer speakers, please note that the quality

of your sound will vary depending on the speed and quality of your internet

connection.

If the sound quality is not satisfactory, you may listen via the phone: dial

1-866-570-7602 and enter your PIN when prompted. Otherwise, please

send us a chat or e-mail [email protected] immediately so we can address

the problem.

If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing Quality

To maximize your screen, press the F11 key on your keyboard. To exit full screen,

press the F11 key again.

FOR LIVE EVENT ONLY

Continuing Education Credits

In order for us to process your continuing education credit, you must confirm your

participation in this webinar by completing and submitting the Attendance

Affirmation/Evaluation after the webinar.

A link to the Attendance Affirmation/Evaluation will be in the thank you email

that you will receive immediately following the program.

For additional information about continuing education, call us at 1-800-926-7926

ext. 2.

FOR LIVE EVENT ONLY

Program Materials

If you have not printed the conference materials for this program, please

complete the following steps:

• Click on the ^ symbol next to “Conference Materials” in the middle of the left-

hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

FOR LIVE EVENT ONLY

Apportioning Patent Damages: Analysis, Calculations for Multi-Component Products, Impact of

Claim Scope

Presented by:

Jeffrey Totten and Timothy McAnulty

December 6, 2018

6

Patent Infringement Remedies

ANDA Exclusivity

Permanent Injunction

Lost Profits Enhanced Damages

Design Patent Damages

Attorney Fees ITC Exclusion

Order

Reasonable Royalty

7

Patent Infringement Remedies

ANDA Exclusivity

Permanent Injunction

Lost Profits Enhanced Damages

Design Patent Damages

Attorney Fees ITC Exclusion

Order

Reasonable Royalty

8

Damages for Patent Infringement

9

Damages for Patent Infringement

“Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royaltyfor the use made of the invention by the infringer . . . .”

35 U.S.C. § 284

879 F.3d 1332 (Fed. Cir. Jan. 12, 2018)

Exmark Manufacturing v. Briggs & Stratton

11


• Inventors improved a subpart of mower deck

12



13


14


• Asserted patent claimed the entire mower


15




16



• Damages expert used the entire mower as royalty base


17

Exmark – Base Royalty on Incremental Value

879 F.3d at 1348 (citing Ericsson, Inc. v. D-Link Sys., 773 F.3d 1201, 1226 (Fed. Cir. 2014).)


“The essential requirement is that the ultimate reasonable royalty award must be based on the incremental value that the patented invention adds to the end product.”


18

Exmark – Base Royalty on Incremental ValueExmark – Base Royalty on Incremental Value

“We have held that apportionment can be addressed in a variety of ways … .”“We have held that apportionment can be addressed in a variety of ways … .”



879 F.3d at 1348 (citing Ericsson, Inc. v. D-Link Sys., 773 F.3d 1201, 1226 (Fed. Cir. 2014).)

19


“We have held that apportionment can be addressed in a variety of ways … .”“We have held that apportionment can be addressed in a variety of ways … .”

“[U]sing the accused mower as a royalty base and apportioning through the royalty rate is an acceptable methodology.”

“[U]sing the accused mower as a royalty base and apportioning through the royalty rate is an acceptable methodology.”



879 F.3d at 1348.

20

Exmark – Claims Impact Damages Analysis

“Using the accused lawn mower sales as the royalty base is particularly appropriate in this case because the asserted claim is, in fact, directed to the lawn mower as a whole.”

“Using the accused lawn mower sales as the royalty base is particularly appropriate in this case because the asserted claim is, in fact, directed to the lawn mower as a whole.”

21


▪ A multi-blade lawn mower, comprising:

▪ A mower deck comprising a top wall, a front wall, a back wall, and first and second side walls

▪ A discharge opening formed therein;

▪ Means … for moving said mower deck along the ground;

▪ First and second cutting blades;

▪ Power means … for causing the rotation of each of said cutting blades … and

▪ First and second flow control baffles

Exmark Claim 1

U.S. Patent No. 5,987,863

22


▪ A multi-blade lawn mower, comprising:

▪ A mower deck comprising a top wall, a front wall, a back wall, and first and second side walls

▪ A discharge opening formed therein;

▪ Means … for moving said mower deck along the ground;

▪ First and second cutting blades;

▪ Power means … for causing the rotation of each of said cutting blades … and

▪ First and second flow control baffles

Exmark Claim 1


23

Exmark – Specification Impacts Damages Analysis

24

Exmark – Specification Impacts Damages Analysis

“[T]he flow control baffles … efficiently

direct the grass clippings and air to the

side discharge opening without the grass

clippings being deflected downwardly

from the walls of the mower deck onto the

ground.”


25

Patent Drafting Considerations

879 F.3d 1299 (Fed. Cir. Jan. 10, 2018)

Finjan Inc. v. Blue Coat Sys. Inc.

27

Finjan Inc. v. Blue Coat Sys., Inc.

• Inventors developed system for assessing security of internet files

28

A method of providing computer security by scanning downloaded executable programs and identifying security profiles

A method of providing computer security by scanning downloaded executable programs and identifying security profiles



29



• Accused a real-time rating engine that categorized and assessed security

30


• Accused a real-time rating engine that categorized and assessed security

• Damages expert applied a royalty rate without accounting for non-infringing features


31

Finjan – Royalty Base

“When the accused technology does not make up the whole of the accused product, apportionment is required. ‘[T]he ultimate combination of royalty base and royalty rate must reflect the value attributable to the infringing features of the product, and no more.’”

“When the accused technology does not make up the whole of the accused product, apportionment is required. ‘[T]he ultimate combination of royalty base and royalty rate must reflect the value attributable to the infringing features of the product, and no more.’”

The patent holder has “the burden of proving damages by a preponderance of the evidence.”The patent holder has “the burden of proving damages by a preponderance of the evidence.”

32

Finjan – Beyond the Smallest Saleable Unit

“. . . in any case involving multi-component products, patentees may not calculate damages based on sales of the entire product, as opposed to the smallest salable patent-practicing unit, without showing that the demand for the entire product is attributable to the patented feature.”

“. . . in any case involving multi-component products, patentees may not calculate damages based on sales of the entire product, as opposed to the smallest salable patent-practicing unit, without showing that the demand for the entire product is attributable to the patented feature.”

“. . . if the smallest salable unit—or smallest identifiable technical component—contains non-infringing features, additional apportionment is still required.”

“. . . if the smallest salable unit—or smallest identifiable technical component—contains non-infringing features, additional apportionment is still required.”

33

Apportioning Patent Damages – Lessons from Exmark

“[W]e are troubled by the expert’s analysis because … she failed to explain how the evidence factored into the proposed royalty rate. She merely addressed the Georgia-Pacific factors in light of the facts and then plucked the 5% royalty rate out of nowhere.”

“[W]e are troubled by the expert’s analysis because … she failed to explain how the evidence factored into the proposed royalty rate. She merely addressed the Georgia-Pacific factors in light of the facts and then plucked the 5% royalty rate out of nowhere.”

“Nowhere in her report … did she tie the relevant Georgia-Pacific factors to the 5% royalty rate or explain how she calculated a 5% royalty rate using these factors”

“Nowhere in her report … did she tie the relevant Georgia-Pacific factors to the 5% royalty rate or explain how she calculated a 5% royalty rate using these factors”

“We conclude that the district court abused its discretion in denying Briggs’ motion for a new trial on damages.”“We conclude that the district court abused its discretion in denying Briggs’ motion for a new trial on damages.”

34

Apportioning Patent Damages – Lessons from Finjan

“[T]he $8-per-user royalty rate employed in Finjan's analysis was unsupported by substantial evidence.”“[T]he $8-per-user royalty rate employed in Finjan's analysis was unsupported by substantial evidence.”

“Mr. Chaperot's testimony that an $8-per-user fee is ‘consistent with’ the 8–16% royalty rate established in Secure Computing is insufficient. . . . Finjan fails to adequately tie the facts of Secure Computing to the facts in this case.”

“Mr. Chaperot's testimony that an $8-per-user fee is ‘consistent with’ the 8–16% royalty rate established in Secure Computing is insufficient. . . . Finjan fails to adequately tie the facts of Secure Computing to the facts in this case.”

“Secure Computing did not involve the '844 patent, and there is no evidence showing that the patents that were at issue are economically or technologically comparable.”

“Secure Computing did not involve the '844 patent, and there is no evidence showing that the patents that were at issue are economically or technologically comparable.”

WesternGeco LLC v. ION Geophysical Corp.585 U.S. ___ (2018)138 S. Ct. 2129 (2018)

36

• Damages expert calculated royalty as 10% of ION'scustomers’ revenue

WesternGECO: Calculating Reasonable Royalty

791 F.3d 1340, 1352-53 (Fed. Cir. 2015)

37


• Would have eliminated all of ION’s profit and revenue


791 F.3d 1340, 1352-53 (Fed. Cir. 2015)

38


• Would have eliminated all of ION’s profit and revenue

• Federal Circuit upheld District Court exclusion of expert


791 F.3d 1340, 1352-53 (Fed. Cir. 2015)

39

“District courts are tasked with the gatekeeping function of determining whether to allow an expert to testify.”


791 F.3d 1340, 1353 (Citation Omitted)

40

WesternGECO: Damages for Exporting Components

138 S.Ct. 2129 (2018)

41

WesternGECO: Damages for Exporting Components

138 S.Ct. 2129, 2138 (2018)

“[I]t was ION's domestic act of supplying the components that infringed WesternGeco's patents.

Thus, the lost-profits damages that were awarded to WesternGeco were a domestic application of § 284.”

42

Impact of WesternGECO

Power Integrations, Inc. v. Fairchild Semiconductor, 2018 WL 4804685, at *1 (D. Del. Oct. 4, 2018).

“The Supreme Court’s analysis of the patent damages statute, § 284, has equal applicability to the direct infringement allegations pending here, as governed by § 271(a), as it did to the supplying a component infringement claims at issue in WesternGeco II, which were governed by § 271(f)(2).”

43

Apportioning Damages after WesternGECO

44

Questions?

45

Your Presenters

Timothy McAnulty is a partner in Finnegan’s Washington, D.C. office

Tim practices all aspects of patent law, including

district court litigations, post-grant proceedings,

and strategic counseling focusing in the medical

device, business method, material science, and

chemical processing fields.

Contact Tim:

+1 202 408 4348

[email protected]

Jeffrey Totten is a partner in Finnegan’s Washington, DC office

Jeff focuses on trial-level patent and trade secret

litigation, post-grant validity challenges, and

strategic client counseling in the mechanical and

electrical fields. He enjoys helping clients achieve

their business goals in court, at the Patent Office,

and across the negotiating table.

Contact Jeff:

+1 202 408 4232

[email protected]

46

These materials have been prepared solely for educational and entertainment purposes to

contribute to the understanding of U.S. and European intellectual property law. These materials

reflect only the personal views of the authors and are not individualized legal advice. It is

understood that each case is fact specific, and that the appropriate solution in any case will vary.

Therefore, these materials may or may not be relevant to any particular situation. Thus, the

authors, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (including Finnegan Europe LLP

and Fei Han Foreign Legal Affairs Law Firm) cannot be bound either philosophically or as

representatives of their various present and future clients to the comments expressed in these

materials. The presentation of these materials does not establish any form of attorney-client

relationship with these authors. While every attempt was made to ensure that these materials are

accurate, errors or omissions may be contained therein, for which any liability is disclaimed.

Our Disclaimer

Apportioning Patent Damages: Analysis, Calculations for Multi...

Documents

Transcript of Apportioning Patent Damages: Analysis, Calculations for Multi...