Uniloc v microsoft 2012

Carmichael , U. Joiner , US , "one major determinant of whether an expert should be excluded under Daubert is whether he has justified the application of a general theory to the facts of the case. Applying this principle, the CAFC criticized the application of the 25 percent rule because there was no link between the rule and the specific case:.

The meaning of these cases is clear: there must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25 percent rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement. The rule does not say anything about a particular hypothetical negotiation or reasonable royalty involving any particular technology, industry, or party.

In addition, the court pointed to the lack of testimony by Uniloc's expert suggesting that the starting point of a 25 percent royalty had any relation to the facts of the case, and thus the use of the rule was "arbitrary, unreliable, and irrelevant," failing to pass muster under Daubert and tainting the jury's damages calculation.

Entire Market Value Rule: The CAFC also rejected the expert's application of the entire market value rule, which he used as a check on the total damages. Here, however, there was no evidence that the patented component created the basis for customer demand, as required by the rule: "This case provides a good example of the danger of admitting consideration of the entire market value of the accused where the patented component does not create the basis for customer demand.

Infringement In opposing Uniloc's challenge on the issue of infringement, Microsoft argued that several grounds supported affirmance of the district court's grant of JMOL of noninfringement.

The CAFC rejected each argument in turn, concluding that substantial evidence supported the jury's finding of infringement. Standard of Review: One issue that sophisticated parties often dispute is the relevant standard that applies when reviewing jury verdicts. This appeal was no different — Microsoft contended that the jury verdict should be reviewed de novo , while Uniloc argued that it should be reviewed for substantial evidence.

The CAFC responded by distinguishing situations where "the parties conceded that under one claim construction there was infringement and under the other there was none, and were arguing only over which claim construction was appropriate. In these cases, de novo review applies.

On the other hand, where "the claim construction itself is not contested, but the application of that claim construction to the accused device is," the court applies the substantial evidence standard.

Comment: This distinction reinforces a basic principle of Federal Circuit appellate practice: Parties challenging a jury verdict on the issue of infringement will likely want to frame the dispute on appeal as a question of claim construction; parties defending the verdict will likely want to frame it as a question of application of an accepted construction to the accused product or method.

Of course, whether a party will be able to frame the question in a particular way depends largely on how the issue was set up in the district court — which itself is ideally part of counsel's long term strategic thinking.

Applying this standard, the Federal Circuit concluded that the jury's verdict of infringement was supported by substantial evidence, rejecting Microsoft's arguments to the contrary. The court also rejected Microsoft's argument that a critical "means-plus-function" limitation should be read narrowly.

To the contrary, the court held, it should be read broadly, applying language from IMS Tech. Haas Automation, Inc. Expert Testimony, redux: Also of note is the court's ruling with respect to expert testimony as it pertains to infringment.

Although the district court rejected the testimony of Uniloc's expert as "incomplete, oversimplified and frankly inappropriate," the CAFC concluded that this rejection was improper because the district court had already fulfilled its gatekeeping function under Daubert when it explicitly noted that the expert was "qualified. Rather than implicating joint conduct, the court ruled, Uniloc's claim was structured so as to capture infringement by a single party by focusing on one entity.

Willful Infringement: On the issue of willfulness, the CAFC continued to apply its objective super-threshold for proving willfulness. Presumption of Validity: in addressing Microsoft's cross-appeal of the denial of its motion for JMOL and a new trial on invalidity, the court declined to back away from the "clear and convincing" standard for invalidity. Rejecting Microsoft's argument that its burden was to show invalidity simply by a preponderance of the evidence — as opposed to clear and convincing evidence — because the prior art reference was not before the PTO, the court continued to apply the higher standard.

Applying this standard, the court rejected Microsoft's argument that it was simply practicing the prior art, and thus a finding of infringement necessitated a finding of invalidity. I personally have never seen an example of someone pulling something out of thin air, but I believe it does happen.

In a licensing scenario, there are lots of other factors exclusivity, territory, term, options, etc. These are factors internal to the parties, and do not even necessarily take into account industry practices. This brings us to the question: RR for what type of license? Retained rights?

Why characterize the license in these terms? If that were the only basis for comparison to the facts of the instant case provided by an expert advocating a particular starting point, should the particular starting point advocated be used?

After all, why restrict evidence pertinent to a hypothetical negotiation to facts arising in only actual negotiations? It is not only evidence, but it is in fact the BEST evidence. What exactly does this mean? Yet another basic litigation failure by a heroic D. Name partner and lead counsel, Donald R. Ned, see. March 19, The principal question of law now presented is as to the general rule that should govern the amount to be recovered. The defendants contend that the plaintiff, having established license fees for the use of his patent, is not entitled to any gains and profis accruing to the defendants in excess of those fees.

The plaintiff contends that, as the profits to be accounted for exceed the damages, he has the right, waiving the damages found by the master, to have a decree for profits.

In an action at law for the infringement of a patent, the plaintiff can recover a verdict for only the actual damages which he has sustained; and the amount of such royalties or license fees as he has been accustomed to receive from third persons for the use of the invention, with interest thereon from the time when they should have been paid by the defendants, is generally, though not always, taken as the measure of his damages; but the court may, whenever the circumstances of the case appear to require it, inflict vindictive or punitive damages, by rendering judgment for not more than thrice the amount of the verdict.

Acts July 4, , c. McCormick, 16 How. Ransom, 23 How. Hayden, 3 Wall. Nock, 17 Wall. Sickles, 19 Wall. Denig, 92 U. But upon a bill in equity by the owner against infringers of a patent, the plaintiff is entitled to recover the amount of gains and profits that the defendants have made by the use of his invention.

This rule was established by a series of decisions under the patent act of , which simply conferred upon the courts of the United States general equity jurisdiction, with the power to grant injunctions in cases arising under the patent laws.

Act July 4, , c. Woodworth, 15 How. Mason, 20 How. Goodyear, 9 Wall. Whitney, 14 Wall. Perry, 21 Wall. Graham, 23 Wall. Conover, October term, , 11 O. Pavement Co. Railway Co. While I still am not convinced he is right, I am hopeful that he is right. If one has a patent on a component, can he still get a royalty on the entire system? Lots of chuckles seein ya have a nice conversation with Ned about one of his invisible law calamities.

New Light, perhaps my views are influenced by experience. Infringers normally state that they are not responsible for damages based on the larger system if there is a separate market for the patented component. That is their understanding of the entire market value rule. Infringers will also argue that the patent is on the component even if the claim is on the system, if the point of novelty lies only in the component.

We need not discuss this issue here. The Uniloc case does not forbid any analysis. I have trouble seeing wher you draw such a conclusion. What this case merely holds is that the generation of the RR must be grounded inthe facts of the case and not pulled out of the air. Your example provides facts that the instant case did not have. Thus, your example is not meaningful in conjunciton with the holdings of the case. New Light, just to test your lack of alarm, you still believe that I could prove that the patent on a component, lets say a microprocessor, of a larger system, e.

You see my point? The value of the microprocessor is established by ITS relationship to the larger apparatus and not by the price the computer company paid for it. I think that it is this microprocessor-computer relationship that is in jeopardy. What the Feds have said no more and no less is that the RR must be tied tot he actual facts of the present case. Again, please correct me if my restatement is incorrect.

Your question here indicates that there is some relationship between the patented product and the profits of the infringing good, but that relationship is not based on a physical interrelationship. The apportionment process is not tied to any such physical interrelationship.

It has not changed based on this decision. Now id the angle you are looking at is that the relationship is not a one to one patented item to infringing item , but rather, a one-to-many patented item to bulk of infringing goods , the apportionment process is distinctly different and may be more difficult, but the ground rules of when the Entire Market Rule applies has not changed with this decision.

Your claim that the patent owner has no remedy is baseless. He has all the remedy that had before. He merely has to get to the RR value based on actual facts. The result here is consistent with law as far as the Entire Market Rule. I am sorry, but to me, it appears that you are chasing ghosts. See Gar-retson, U. JBL, Inc. Dura Corp. Kelley Co. Clark, U. See also Lucent Techs. So the Feds held here that it error to even introduce evidence of the entire value absent a showing that the demand for the products were attributable to the invention.

So where does that leave us when the value of the invention is to increase total sales of the products, and thereby the total profits, by reducing piracy, which in turn depends on aggregates of all units sold and which does not have any particular relationship to the value of a particular copy of a product in terms of its enhanced functionality?

Where does that leave the patent owner? He has no remedy, it seems, as he cannot even discuss total revenues without the precursor showing of demand. This is an absurd result. In such cases, I would agree that the RR can be based on the protected software price. The Supremes do indicate that the defendant is responsible if certain conditions exist as I quoted above.

I take it that it is your position that such a case no apportionment is possible exists in the instant case which I cannot agree with. As I indicated, the Entire Market Rule portion is mere dicta and cannot have the devastating effect you think it does, even is what you think is true.

Either the case is that the invention subsumes the product or is merely a part of the product. The decision here does not really address the subsuming option, so it must be addressing the part of the product option.

There is nothing here that reverses or precludes the RR being based on the price of the larger product. The conditions that would call for that simply were not a part of the instant case; the fact pattern did not call out for a discussion on such a situation, and clearly the court is making that distinction. The court is not eliminating that rationale. Ned The discussion of the entire market rule seem to suggest, did it not, that a RR could not be on the larger product absence a showing that the entire value of the larger product is attributable to the invention?

Is there a specific sentence or two from the decision that you can point to, Ned, to justify this interpretation? A new light, you are far to generous in your assessment of the Fed. The discussion of the entire market rule seem to suggest, did it not, that a RR could not be on the larger product absence a showing that the entire value of the larger product is attributable to the invention?

This is patent nonsense given that the value of the invention to the product can vary with the value of the product regardless of whether the entire value of the product is attributable to the invention.

I gave you the General Electric case as one example. But even here is it more than quite obvious that the value of the validation system depends upon the value of the software product it protects. Any RR would therefor be based on the price of the software, not on some arbitrary abstract number pulled out of thin air. It is the Federal Circuit that has a screw loose. However, if the patent was on the larger apparatus, the duty was on the defendant. And no doubt such, in the end, will be the practical result in many cases.

But such burden is not imposed by law; nor is it so shifted until after the plaintiff has proved the existence of profits attributable to his invention and demonstrated that they are impossible of accurate or approximate apportionment. If then the burden of separation is cast on the defendant it is one which justly should be borne by him, as he wrought the confusion.

The facts of that one case cannot discuss the two sided situation you present If the Patent is on a component of one side or the other. I do not see how you can stretch any influence from the Supreme Court decision to support your statement. In fact, the earnestness to apply any known facts to the particular situation would indicate, at least to me, that if different facts are in play for different infringing goods, than different percentages are practically mandatory.

Finally, I am having trouble simply jumping to the conclusion that the RR should be on the entire value of the system, or even why this is a point under discussion. I am not sure that your view is supportable given the facts and the cases in front of us — even in dicta. There really is not anything in this decision that is earth-shattering other than the elimination of an easy tool to estimate the RR.

This falls perfectly in line with general patent law guidelines of treating each fact pattern on its own merits. Actual use of RR has not been affected by this decision — only getting to the value of RR has. Actual burden of damage calculation has not been altered by this decision either. There is nothing here to suggest anything of this sort. It is very clear from the facts of the case that in no way could the patented item be called the major portion in order to invoke use of the Entire Market Value Rule.

Clearly the facts indicate that the Uniloc expert lumped the entire Microsoft product into his check figure and then tried to take a percentage of this errant starting point. The court here is correctly agreeing with Microsoft on this matter — this is neither scandalous nor revolutionary.

Yeah, but Rader and crew seem to suggest that no RR could ever be based on the value of the larger apparatus. What I am suggesting is that the value of the invention to the larger apparatus could vary with the value of the larger apparatus. Now turning back to apportionment: if the patent is on the validation system, the RR should be on the entire value of that system.

New light: the precursor to the current damages statute was enacted at least in part to simplify the accounting for damages by setting a floor of no less than a reasonable royalty — apparently everyone was having difficulties with apportionment.

GP analysis — assumes that the infringement will stop. Let me get this straight — a reasonable royalty for past infringement is fine, but a reasonable royalty for future infringement is too speculative? This would seem to suggest that royalties could be a percentage of the sales price of the entire apparatus.

INANE, legal damages under the 7th amendment and the statute are for past damages. An injunction gave the full relief going forward. While now blurred — the two spring from the separate doctrines of law and equity.

The legal judgment was then presented to a court of equity for injunctive relief. Relief pendente lite is something different. Ned is correct. New Light: Agreed — that if the patent is on a component of a larger apparatus, the patentee had the duty to apportion. The patent is on the validation system. I would think this is apportionment enough and that the patent owner had carried his burden of proof. I think this is nonsense. Think of the famous General Electric case where the Supremes specifically authorized field of use licenses, holding as infringments apparatus sold for unlicensed use even though it was the identical apparatus for both licensed and unlicensed uses.

The problem was in that case was that an amplifier for a commercial application was much more valuable than an amplifier for a consumer application even if it was the identical apparatus.

Although a reasonable royalty is just one of the remedies available to a patentee, it has become a much more common remedy in recent years.

Because of the difficult standards the court imposes for a patentee to obtain either an injunction or lost profits, patentees often bring suit with the primary goal of recovering a high royalty rate. As Judge Rader explained in Riles v. Shell Exploration and Production Co. Ultimately, the goal of the analysis is to determine what price the patentee and the alleged infringer would have negotiated, had they done so before the infringer infringed.

Sukup Mfg. JBL, Inc. Although the court relied on Supreme Court precedents to come to this decision, it seems that the rejection of this rule requires less legal analysis and more common sense. He found that the estimated damages equaled only 2.

The Federal Circuit again, however, rejected this application due to the relationship between the patented product key and the infringing word processing software.

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