Recent Developments in Patent Damages Law - A Report from the APLI:SV, Part 4

By TAP Guest Blogger

Posted on January 5, 2016


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This is the fourth report in a 7-part series from The 16th Annual Advanced Patent Law Institute: Silicon Valley.

The report is written by Kevin Hickey, Microsoft Research Fellow, Berkeley Center for Law & Technology at Berkeley Law School.

 

New developments in proving, calculating and obtaining damages and fees in patent litigation were analyzed in several sessions at the recent Advanced Patent Law Institute: Silicon Valley (APLI:SV). Between the Supreme Court’s decision on fee shifting last year in Octane, the recent grant of certiorari in the Halo and Stryker cases on willful infringement, and a number of new Federal Circuit decisions on damage apportionment and extraterritoriality, there was a lot to discuss.

 

In Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), the Supreme Court created a new standard for when a winning party can obtain an attorneys’ fee award under 35 U.S.C. § 285. As a presentation by Clement S. Roberts explained, this new standard allows fee shifting whenever a case “stands out” from the typical patent case either on the substantive merits or the party’s litigating position. In effect, this rule gives district courts greater discretion in the decision to award fees than under the Federal Circuit’s former Brooks Furniture standard. Mr. Roberts presented early empirical evidence suggesting that it has become easier for defendants to receive fee awards after Octane, while the odds for plaintiffs have remained constant. (See slide 7.) The main effect of Octane, however, may be to increase variability in fee awards across jurisdictions—creating the potential for unfairness to litigants who find themselves in a particularly plaintiff- or defendant-friendly jurisdiction. Octane also informs attorneys’ ethical duties: Failure to conduct a robust pre-filing investigation, for example, may not only subject attorneys to Rule 11 motions, but expose them to adverse fee awards as well.

 

A session led by G. Hopkins Guy, III and Keith Slenkovich covered several recent trends and news on patent damages issues. The first issue they addressed was an emerging jurisdictional split over Daubert “do-overs”: if a party’s damages expert is excluded from evidence on a Daubert motion, can that party try again with a new expert or damages theory? Some courts are fairly lenient in allowing a second (or even third) attempt, while other courts permit a single try only. Litigants have responded by proffering multiple damages experts and/or multiple theories at the outset—although this strategy carries obvious costs in duplication of effort, and can undermine your expert’s credibility.

 

The Supreme Court’s decision to grant certiorari in the Halo and Stryker cases was also highlighted by the panel. These grants make it likely that current standard for willful infringement under 35 U.S.C. § 284 will change. In In re Seagate, the Federal Circuit established a two-step test for when damages may be enhanced based on willful infringement, requiring both objective and subjective recklessness. A finding of willful infringement exposes defendants to a potential trebling of patent damages awards. Given the Supreme Court’s recent skepticism of rigid damages tests in Octane, the Court may well reverse the Federal Circuit again and adopt a more discretionary approach.

 

Another important recent damages case is Carnegie Melon University v. Marvell, __ F.3d __ (Fed. Cir. 2015). A presentation by Sasha Rao was devoted to evaluating this case and other Federal Circuit decisions analyzing how activities that cross international borders should be treated in apportioning patent damages and determining whether patent rights are exhausted. The key holding of Marvell is that infringing products that are manufactured and distributed abroad will not count in patent damages calculations unless the sale of these products is “within the United States.” The Federal Circuit’s test for whether a sale is within the United States is highly factual and looks to the location of product design, testing, marketing, negotiations, delivery, and performance—and not merely where the formal contract was executed. Similarly thorny and fact-intensive issues arise in determining whether activities abroad will exhaust domestic patent rights. The Federal Circuit’s recent grant of rehearing en banc in Lexmark v. Impression may signal a coming change in transborder exhaustion doctrine.

 

Related Resources

Clement S. Roberts – Fee Shifting & Ethics
G. Hopkins Guy, III, and Keith Slenkovich – Current Trends in Patent Damages
Sasha Rao – Transborder Issues and Exhaustion

 

Read more on the Advanced Patent Law Institute: Silicon Valley

 

This conference summary was written by Kevin Hickey. Mr. Hickey is the Microsoft Research Fellow, Berkeley Center for Law & Technology at Berkeley Law School.

 


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