Damages Panel – Apportionment, Early Damages Disclosures, Enhanced Damages, and More! December 14, 2017 Karen Boyd, Turner Boyd Daralyn Durie, Durie Tangri Leah Waterland, Cisco Systems, Inc. Moderator: Gregory Pinsonneault, LitiNomics

Apportionment

Why apportion? What is the correct royalty base? Smallest Saleable Unit Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1327 (Fed. Cir. 2014) (SSU is only the first step in determining a reasonable royalty) What is the value of the patent? Incremental contribution of patent over prior art Astrazeneca AB v. Apotex Corp., 782 F.3d 1324, 1338 (Fed. Cir. 2015) (damages must account for value of invention in comparison to conventional elements recited in claims) Other patents (defendant and third party) LaserDynamics Inc. v. Quanta Computer, Inc., 694 F.3d 51, 66 (Fed. Cir. 2012) (“[Electronic devices may include dozens of distinct components, many of which may be separately patented…”) Other components of value (know-how, marketing, sales, existing customer base)

How to apportion? What evidence can inform conclusions about contribution of patent? Marketing documents Analysis of patent landscape Comparisons of products in market Usage analysis Customer survey Regression analysis What not to do: Count number of features Good Tech. Corp. v. MobileIron, Inc., 2015 WL 4090431 (N.D. Cal. July 5, 2015) (assignment of equal value to features unreliable where damages expert did “no investigation into whether any of the criteria is more important than any others, or how strongly each criterion is tied to the patents). Stragent, LLC V. Intel Corp., 2014 U.S. Dist. LEXIS 106167 (E.D.Tex. 2014) (Dyk)

Local Rules on Damages Disclosures

Local Rules and Standing Orders N.D. Cal. Patent Local Rules with new disclosure requirements D. Del. Judge-Specific Scheduling Orders S.D. Ind. Patent Case Management Plan E.D. Tex. Discovery Order for Patent Cases & Track B S.D. Tex. Patent Local Rules W.D. Pa. Patent Local Rules Sedona Conference: Proposed Model Local Rule for Damages Contentions

N.D. California Revised Local Rules Rule 26 – Initial Case Management Infringement Contentions – Disclose time period of damages Automatic Document Production Patentee’s Damages Contentions Accused Infringer’s Affirmative Response

Enhanced Damages After Halo

Quick Review Halo v. Pulse, 136 S. Ct. 1923 (2016) Test is subjective willfulness, intentional or knowing Burden of proof is preponderance of the evidence Jury finding on willfulness is a question of fact review for substantial evidence. Court decides whether to enhance damages, which is “a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior. . . . Willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.” Decision on whether to enhance damages reviewed under abuse of discretion standard. Read factors are a non-exclusive way to think about enhancement. Georgetown Rail Equip. v. Holland, 867 F.3d 1229 (Fed. Cir. 2017)

District Courts—Motions for Enhanced Damages In the 18 months preceding Halo: 42% grant rate In the 18 months since Halo: 59% grant rate

District Courts—Motions for Enhanced Damages In the 18 months preceding Halo: 12 motions brought In the 18 months since Halo: 41 motions brought

Were there simply more verdicts? Nope. In the 18 months preceding Halo: 105 verdicts, 12 motions (11.4%) In the 18 months since Halo: 94 verdicts, 41 motions (44%)

Federal Circuit Vacate finding of no willfulness and remand WesternGeco v. ION Geophysical, 837 F.3d 1358 (Fed. Cir. 2016) Halo Elecs. v. Pulse Elecs., 831 F.3d 1369 (Fed. Cir. 2016) Mann Found. v. Cochlear Corp., 841 F.3d 1334 (Fed. Cir. 2016) Apple v. Samsung, 839 F.3d 1034 (Fed. Cir. 2016) Vacate grant of motion in limine preventing willfulness evidence Mentor Graphics v. EVE-USA, 851 F.3d 1275 (post-suit willfulness conduct with no preliminary injunction) Affirm finding of willfulness Artic Cat v. Bombardier, 2017 U.S. App. LEXIS 24700 (CAFC, Dec. 7, 2017) (defendant knew about patents before they issued, conducted only cursory analysis of patents, waited years before seeking advice of qualified and competent counsel, and unsuccessfully tried to buy asserted patents through a third party)

Federal Circuit Affirm pre-Halo jury finding of subjective willfulness; remand on enhancement Innovention Toys v. MGa Entm’t, 667 Fed. Appx. 992 (CAFC, Aug. 5, 2016) Stryker v. Zimmer, 837 F.3d 1268 (Fed. Cir. 2016) Affirm pre-Halo jury finding of subjective willfulness; affirm enhancement WBIP v. Kohler, 829 F.3d 1317 (CAFC, July 19, 2016) (“Kohler cannot insulate itself from liability for enhanced damages by creating an (ultimately unsuccessful) invalidity defense for trial after engaging in the culpable conduct of copying, or “plundering,” WBIP's patented technology prior to litigation.”) Georgetown Rail v. Holland, 867 F.3d 1229 (Fed. Cir. 2017) Affirm holding of no enhancement. Presidio v. Am. Tech. Ceramics, 2017 U.S. App. LEXIS 23485 (CAFC, Nov. 21, 2017)

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