Intellectual Property Group IP Byte sm : Damages Update Steve Hankins Schiff Hardin © 2015 Schiff Hardin LLP. All rights reserved.

The update: “Calculating” the reasonable royalty –Comparable licenses - or not? –EMVR/Apportionment –The fate of Nash bargaining Adjustments to FRAND Cases to watch Highlights from the district courts 2 © 2015 Schiff Hardin LLP. All rights reserved.

Reasonable Royalty – Other Licenses The search for comparable licenses… The fix for failing – per CAFC, it's ok if the other licenses have differences, where the differences are presented to the jury VirnetX, Inc. v. Apple Inc., 767 F.3d 1308 (Fed. Cir ) 3 © 2015 Schiff Hardin LLP. All rights reserved.

Reasonable Royalty – Nash "Solution" Theory: where two persons bargain over a matter, there is a "solution" where each bargainer gets the same money profit Federal Circuit: Without sufficiently establishing that the premises of the theorem applies to the fact of the case at hand, reliance on this theory is as inappropriate as any "rule of thumb" VirnetX, Inc. v. Apple Inc., 767 F.3d 1308 (Fed. Cir. 2014) 4 © 2015 Schiff Hardin LLP. All rights reserved.

Reasonable Royalty – Apportionment Divide, divide, and divide again EMVR analysis does not end with identifying smallest saleable patent-practicing unit if that unit still contains significant unpatented features VirnetX, Inc. v. Apple Inc., 767 F.3d 1308 (Fed. Cir. 2014) 5 © 2015 Schiff Hardin LLP. All rights reserved.

Exceptional Cases Federal Circuit: –Exceptional case under Section 285 only where (1) some material inappropriate conduct or (2) litigation is both brought in subjective bad faith and objectively baseless Supreme Court: –"Exceptional" case is simply one that stands out from others with respect to the substantive strength of a party's position or the unreasonable manner in which the case was litigated; District courts should determine on case-by-case basis, considering the totality of the circumstances Octane Fitness v. Icon Health & Fitness (2014) –Standard of review for all aspects of court's decision on exceptional case is abuse of discretion Highmark v. Allcare Health Mgmt. Systems (2014) 6 © 2015 Schiff Hardin LLP. All rights reserved.

RAND Substance: Ericsson v. D-Link Systems,773 F. 3d 1201 (Fed. Cir. 2014) –G-P factors not a consideration in RAND case –Apportionment is required and value of a specific patent within a standard must be identified –District court not required to instruct jury on holdup or stacking unless actual evidence presented by accused infringer Process: Microsoft v. Motorola, No (9th Cir ) –Motorola argued at 9th Circuit that district court's introduction to jury of court's predetermined fair royalty rates was inappropriate 7 © 2015 Schiff Hardin LLP. All rights reserved.

Cases to watch… Life of patent –Kimble v. Marvel Enterprises SCOTUS will decide whether to review its rule in Brulotte that royalty agreements cannot be enforced past a patent's expiration date per se Willfulness –Halo Electron. v. Pulse Electron While Federal Circuit request for rehearing en banc denied, Judges O'Malley and Hughes call for reconsideration of willfulness law in light of Highmark/ Octane Inducement –Commit v. Cisco SCOTUS: Is good faith belief a valid defense to claims of "actively inducing infringement"? 8 © 2015 Schiff Hardin LLP. All rights reserved.

Highlights from the District Courts ThinkOptics v. Nintendo –June 14, E.D. Texas) (def. expert should not have excluded claimed elements from RR analysis) Universal Electr. v. Universal Remote –(April 21, C. D. Cal) (plff. expert, lost profits, RR, PE) Affinity Labs v. Ford –(Aug. 22, E.D. Texas) (def. expert, RR) Atlas v. Medtronic –(Oct. 6, S.D. Fla) (plff. expert, RR) IV v. Xilinx (April 21, D. Del) –(plff. expert, RR, wilfuIIness) 9 © 2015 Schiff Hardin LLP. All rights reserved.

Steve Hankins is Group Leader of Schiff Hardin's Intellectual Property Group. He is based in San Francisco and has tried cases throughout the United States. 10 © 2015 Schiff Hardin LLP. All rights reserved.